Question
On April 1, Z&T Enterprises executes a $500,000 note payable to Turow Bank to borrow cash. Z&T assigns $600,000 of their Accounts Receivable as collateral
On April 1, Z&T Enterprises executes a $500,000 note payable to Turow Bank to borrow cash.
Z&T assigns $600,000 of their Accounts Receivable as collateral on the note
Turow Bank charges Z&T a finance charge of .5% (.005) of the Accounts Receivable when the loan originates
Z&T must remit net cash collections from Accounts Receivable monthly, as well as any accrued interest at 8% until the loan is repaid
April: Z&T collected $200,000 of Accounts Receivable
May: Z&T collected $250,000 of Accounts Receivable
June: Z&T collected $120,000 of Accounts Receivable
Prepare JEs for Z&T for the life of the note, including the cash collections.
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Introductory Financial Accounting for Business
Authors: Thomas Edmonds, Christopher Edmonds
1st edition
1260299449, 978-1260299441
