PART 1

On October 1, 2018 Oliver Corp. assigns $500,000 of its accounts receivable to U.S. Bank as collateral for a $350,000 note. U.S. Bank assesses a finance charge of 2.5% of the receivables assigned, and interest on the note of 6%. Prepare the October 1st journal entry for Oliver Corp. and U.S. Bank.

PART 2

On October 1, 2018 Monroe Inc. sold $500,000 of accounts receivable to Block Co. WITHOUT A RECOURSE BASIS. Block assesses a 4.5% finance charge of the amount of accounts receivable and retains an amount equal to 8% of accounts receivable for possible adjustments. Prepare the journal entries on October 1, 2018 for both Monroe Inc. and Block Co.

PART 3

Assume that Monroe Inc. solde the accounts receivable WITH A RECOURSE BASIS. Prepare journal entries for Monroe Inc. on October 1, 2018. The recourse liability is $8,000.