Assigning Accounts Receivable On April 1, 2010, Prince Company assigns $500,000 of its accounts receivable to the

Question:

Assigning Accounts Receivable On April 1, 2010, Prince Company assigns $500,000 of its accounts receivable to the Third National Bank as collateral for a $300,000 loan due July 1, 2010. The assignment agreement calls for Prince Company to continue to collect the receivables. Third National Bank assesses a finance charge of 2% of the accounts receivable, and interest on the loan is 10% (a realistic rate of interest for a note of this type).

(a) Prepare the April 1, 2010, journal entry for Prince Company.

(b) Prepare the journal entry for Prince’s collection of $350,000 of the accounts receivable during the period from April 1, 2010, through June 30, 2010.

2010. Prepare the journal entry to record this payment

Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...