Answered step by step
Verified Expert Solution
Question
1 Approved Answer
ABC Companies assigned $700,000 of its accounts receivable to DEF Bank as collateral for a $500,000 loan. ABC will continue to collect accounts receivable, debtors
ABC Companies assigned $700,000 of its accounts receivable to DEF Bank as collateral for a $500,000 loan. ABC will continue to collect accounts receivable, debtors are not notified of the settlement with the bank. The bank charges 1% finance charges on accounts receivable and 12% interest on the loan. ABC makes the corresponding payments to the bank when it collects its accounts receivable. Give the journal entry for ABC and the journal entry for Bank.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started