# Orion Rentals is unable to collect on a note worth \$25,000 and has accumulated interest of \$250. It convert this note and interest to accounts receivable. After some time, Orion is still unable to collect the debt and it decides to sell the converted note to a collection agency. The collection agency will pay only 20% of the value of accounts receivable to Orion. What is the amount of cash paid to Orion from the collection agency? A. \$5,000 B. \$5,050 C. \$20,000 D. \$19,950

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### Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685

#### Solutions

Chapter
Section
FindFindarrow_forward

### Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685
Chapter 9, Problem 23MC
Textbook Problem
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## Orion Rentals is unable to collect on a note worth \$25,000 and has accumulated interest of \$250. It convert this note and interest to accounts receivable. After some time, Orion is still unable to collect the debt and it decides to sell the converted note to a collection agency. The collection agency will pay only 20% of the value of accounts receivable to Orion. What is the amount of cash paid to Orion from the collection agency?A. \$5,000B. \$5,050C. \$20,000D. \$19,950

To determine

Concept introduction:

Financial accounting or reporting is used to prepare financial statements to present the financial position of the entity. Financial accounting is mandatory for an entity and it has to follow Generally Accepted Accounting Policies (GAAP) for accounting. The statements produced under financial accounting include the Income statement, balance sheet and statement of cash flows. Users for financial information can be internal as well as external like lenders, creditors, government, employees and owners, etc.

To choose:

The correct option for the cash paid by collection agency to Company O.

### Explanation of Solution

Value of note = \$25,000

Accumulated Interest = \$250

Note along with accumulated interest was converted to Accounts Receivable

Value of accounts receivabl...

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