Intermediate Accounting
3rd Edition
ISBN: 9780136912644
Author: Elizabeth A. Gordon; Jana S. Raedy; Alexander J. Sannella
Publisher: Pearson Education (US)
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Chapter 9, Problem 9.8P
a.
To determine
The closing balance of notes payable for each month.
Given information:
Accounts receivables assigned for $900,000.
Borrowed amount is $850,000.
Interest is 6% payable on balance of loan at the beginning of the month
Accounts receivables collected are $100,000 in April, $487,000 in May and $113,000 in June.
b.
To determine
To prepare: The journal entries to record the financing arrangement.
Given information:
Accounts receivables assigned for $900,000.
Borrowed amount is $850,000.
Interest is 6% payable on balance of loan at the beginning of the month
Accounts receivables collected are $100,000 in April, $487,000 in May and $113,000 in June.
c.
To determine
The accounting treatment in case of pledging.
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Students have asked these similar questions
Somber Company borrows $892,000 from Silver Financing Associates by securing a revolving line of credit at a 9% interest rate on April 15.
Interest is due and payable at the end of each month based on the outstanding balance at the beginning of the month. Somber assigns $939,000 of its accounts receivable as collateral for the lending arrangement. Assume that accounts receivable are collected at the end of the month and the proceeds are remitted to Silver at the end of the month.
Month
Accounts Receivable Collected
April
140,000
May
490,000
June
117,000
Requirements
a.
Compute the balance of notes payable at the end of each month.
b.
Prepare the necessary journal entries for these transactions.
c.
If the accounts receivable had been pledged as collateral, what entry would be made at April 15?
A:
Notes
Notes
Payable
Accounts
Payable
Beginning
Interest
Receivable
Cash Paid
Ending
Month…
Goldie Corporation takes out a $10,000 cash loan from its bank by signing a 15%, 9-month promissory note on August 1. The journal entry at the note's maturity will include:
Credit to Cash for $10,000
Debit to Interest Expense for $1,125
Debit to Interest Expense for $625
Debit to Interest Expense for $500
On June 30, 2021, the High Five Surfboard Company had outstanding accounts receivable of $600,000. On July 1, 2021, the company borrowed $450,000 from the Equitable Finance Corporation and signed a promissory note. Interest at 10% is payable monthly. The company assigned specific receivables totaling $600,000 as collateral for the loan. Equitable Finance charges a finance fee equal to 1.8% of the accounts receivable assigned.Required:Prepare the journal entry to record the borrowing on the books of High Five Surfboard.
Chapter 9 Solutions
Intermediate Accounting
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