On April 1, 2020,AyayaiCompany assigns $531,400of its accounts receivable to the Third National Bank as collateral for
Question:
On April 1, 2020,AyayaiCompany assigns $531,400of its accounts receivable to the Third National Bank as collateral for a $313,600loan due July 1, 2020. The assignment agreement calls forAyayaito continue to collect the receivables. Third National Bank assesses a finance charge of4% of the accounts receivable, and interest on the loan is10% (a realistic rate of interest for a note of this type).
1) Prepare the April 1, 2020, journal entry forAyayaiCompany.
2) Prepare the journal entry forAyayai's collection of $387,200of the accounts receivable during the period from April 1, 2020, through June 30, 2020
3) On July 1, 2020,Ayayaipaid Third National all that was due from the loan it secured on April 1, 2020. Prepare the journal entry to record this payment.
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