Moon Inc assigns $3,000,000 of its accounts receivables as collateral for a $2 million loan with a bank. The bank assesses a 3% finance charge on the loan amount and charges interest on the note at 6%. What would be the journal entry to record this transaction?
A) Debit Cash for $1,940,000, debit Interest Expense for $60,000, and credit Notes payable for $2,000,000.
B) Debit Cash for $1,940,000, debit Interest Expense for $60,000, and credit Accounts Receivable for $2,000,000.
C) Debit Cash for $1,940,000, debit Interest Expense for $60,000, debit Due from Bank for $1,000,000, and credit Accounts Receivable for $3,000,000.
D) Debit Cash for $1,820,000, debit Interest Expense for $180,000, and credit Notes Payable for $2,000,000.
Correct Answer:
Verified
Q118: Equestrain Roads sold $80,000, of goods and
Q119: Black Corporation had a 1/1/14 balance in
Q120: Assume Royal Palm Corp., an equipment distributor,
Q121: Geary Co. assigned $800,000 of accounts receivable
Q122: In preparing its May 31, 2014 bank
Q124: The cash account shows a balance of
Q125: The opening balance of Accounts Receivable for
Q126: In preparing its bank reconciliation for the
Q127: Wilkinson Corporation factored, with recourse, $400,000 of
Q128: During the year Tulip reported net sales
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents