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5. Devil Rays Co borrows $250,000 from Dodgers Bank on February 1, 2019. Dodgers requires Devil Rays Co to assign $300,000 worth of A/R as
5. Devil Rays Co borrows $250,000 from Dodgers Bank on February 1, 2019. Dodgers requires Devil Rays Co to assign $300,000 worth of A/R as collateral for the loan. Devil Rays will continue to collect the A/R. At the end of each month, Devil Rays must remit the collections plus the interest on the unpaid portion of the loan at the beginning of the month. The annual interest rate on the loan is 6%. Dodgers charges a finance charge of 2% of assigned A/R. The cash collections related to the assigned A/R are provided below. Month February March April Cash Collected from Customers $75,000 $125,000 $80,000 (a) (1 point) What journal entry(s) should Devils Ray Co record on February 1? (b) (0.5 pts) How much total interest did Devil Rays pay to Dodger Bank for this loan over all the months the loan was outstanding? (journal entries not required) (c) (0.5 pts) How would Devil Rays Co's Total Liabilities be different if they had factored $300,000 worth of A/R without recourse instead assigning them? Circle one (no explanation required). Lower No Change Higher
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