On August 1, a firm assigned $220,000 of its $580,000 of accounts receivable. The finance company advances 85% of the assigned accounts less a $22,000 fee. Interest is 10% and payable monthly on the beginning-of-period loan balance. A loan payment is remitted at the end of each month. Each payment includes principal and interest. The amount of each loan payment equals the cash collected on receivables during the month plus interest on the loan balance. If $100,000 was collected on accounts receivable during August, on the first loan payment, how much should be debited to Interest Expense?
On August 1, a firm assigned $220,000 of its $580,000 of accounts receivable. The finance company advances 85% of the assigned accounts less a $22,000 fee. Interest is 10% and payable monthly on the beginning-of-period loan balance. A loan payment is remitted at the end of each month. Each payment includes principal and interest. The amount of each loan payment equals the cash collected on receivables during the month plus interest on the loan balance. If $100,000 was collected on accounts receivable during August, on the first loan payment, how much should be debited to Interest Expense?
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 August 1, a firm assigned $220,000 of its $580,000 of accounts receivable. The finance company advances 85% of the assigned accounts less a $22,000 fee. Interest is 10% and payable monthly on the beginning-of-period loan balance. A loan payment is remitted at the end of each month. Each payment includes principal and interest. The amount of each loan payment equals the cash collected on receivables during the month plus interest on the loan balance.
If $100,000 was collected on accounts receivable during August, on the first loan payment, how much should be debited to Interest Expense?
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