Frank Ritter, Inc. enters into an arrangement with Hisker Enterprises whereby Hisker will assume $100,000 of Ritter's receivables for a 6% fee. These receivables have a related allowance for credit losses of $3,500.

Assuming the transaction was a collateralized loan, which one of the following entries will Ritter make to record this transaction?

Multiple Choice

• DRCash $94,000DRInterest expense6,000CRLoan PayableHisker Enterprises $100,000
• DRCash $94,000DRPrepaid interest6,000CRAccounts receivable $100,000
• DRCash$94,000CRLoan PayableHisker $94,000
• DRCash $94,000DRPrepaid interest6,000CRLoan PayableHisker Enterprises $100,000