On April 1, 2020, NYC Corporation secures a loan with a finance company, using its accounts receivable of $80,000 as collateral for the loan. NYC Corporation agrees to remit customer collections as payments on the loan. Loan proceeds are 85% of the receivables less a 2% finance charge on the balance of the assigned receivables. In addition, the finance company charges 10% interest on the unpaid loan balance, payable at the end of each month. Record the April 1, 2020, entry for NYC Corporation.
On April 1, 2020, NYC Corporation secures a loan with a finance company, using its accounts receivable of $80,000 as collateral for the loan. NYC Corporation agrees to remit customer collections as payments on the loan. Loan proceeds are 85% of the receivables less a 2% finance charge on the balance of the assigned receivables. In addition, the finance company charges 10% interest on the unpaid loan balance, payable at the end of each month. Record the April 1, 2020, entry for NYC Corporation.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter6: Cash And Receivables
Section: Chapter Questions
Problem 10RE: On December 1 of the current year, Jordan Inc. assigns 125,000 of its accounts receivable to...
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On April 1, 2020, NYC Corporation secures a loan with a finance company, using its accounts receivable of $80,000 as collateral for the loan. NYC Corporation agrees to remit customer collections as payments on the loan. Loan proceeds are 85% of the receivables less a 2% finance charge on the balance of the assigned receivables. In addition, the finance company charges 10% interest on the unpaid loan balance, payable at the end of each month.
Record the April 1, 2020, entry for NYC Corporation.
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