Question
On April 1, 2014, Rasheed Company assigns $540,400 of its accounts receivable to the Third National Bank as collateral for a $346,000 loan due July
On April 1, 2014, Rasheed Company assigns $540,400 of its accounts receivable to the Third National Bank as collateral for a $346,000 loan due July 1, 2014. The assignment agreement calls for Rasheed Company to continue to collect the receivables. Third National Bank assesses a finance charge of 2% of the accounts receivable, and interest on the loan is 10% (a realistic rate of interest for a note of this type).
On July 1, 2014, Rasheed paid Third National all that was due from the loan it secured on April 1, 2014. Prepare the journal entry to record this payment.
Date | Account Titles and Explanation | Debit | Credit |
July 1, 2014 ________________________ _____ _____
________________________ _____ _____
________________________ _____ _____
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