A note payable was executed by Sterling Inc. to Miami Finance Company. Sterling Inc. used 5720,000...

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A note payable was executed by Sterling Inc. to Miami Finance Company. Sterling Inc. used 5720,000 of its accounts receivable as collateral for the loan. The contract provided that Miami would advance 85% of the gross amount of the receivables. Sterling Inc. continues to collect payments for the receivables and the cash from customers is then remitted to the finance company. The cash remitted is first applied to the finance charges, with the remainder applied to principal. During the first month, customers owing $492,000 paid cash, less sales returns and allowances of $19,200, originally recorded as a refund liability. The finance charge at the end of the first month was $4,200, During the second month, the remaining receivables were collected in full, except for $4,800 off as uncollectible. Final settlement was effected with the finance company, including payment of an additional finance charge of $1,800. a. Record the entry for Sterling to record the secured borrowing. Account Name Dr. Cr. Cash 492,000 x Note Payable 720,000 x b. Record the entries for Sterling to record (1) the collections and (2) the payment to Miami for the first month. Account Name Dr. Cr. Interest Receivable 0 x Refund Liability Discount on Note Receivable To record collection on receivwebles for first month Interest Expense Allowance for Doubtful Accounts Discount on Note Receivable : x To record payment to Miami for the first month c. Record the entries for Sterling to record (1) the collections for the second month and (2) the final payment to Miami. Account Name Dr. Cr. Cash Receivable from Factor Note Receivable : x To record collection on receivables for second month Interest Expense Cash Loss on Sale of Receivables To record finalLpayment to Miumi A note payable was executed by Sterling Inc. to Miami Finance Company. Sterling Inc. used 5720,000 of its accounts receivable as collateral for the loan. The contract provided that Miami would advance 85% of the gross amount of the receivables. Sterling Inc. continues to collect payments for the receivables and the cash from customers is then remitted to the finance company. The cash remitted is first applied to the finance charges, with the remainder applied to principal. During the first month, customers owing $492,000 paid cash, less sales returns and allowances of $19,200, originally recorded as a refund liability. The finance charge at the end of the first month was $4,200, During the second month, the remaining receivables were collected in full, except for $4,800 off as uncollectible. Final settlement was effected with the finance company, including payment of an additional finance charge of $1,800. a. Record the entry for Sterling to record the secured borrowing. Account Name Dr. Cr. Cash 492,000 x Note Payable 720,000 x b. Record the entries for Sterling to record (1) the collections and (2) the payment to Miami for the first month. Account Name Dr. Cr. Interest Receivable 0 x Refund Liability Discount on Note Receivable To record collection on receivwebles for first month Interest Expense Allowance for Doubtful Accounts Discount on Note Receivable : x To record payment to Miami for the first month c. Record the entries for Sterling to record (1) the collections for the second month and (2) the final payment to Miami. Account Name Dr. Cr. Cash Receivable from Factor Note Receivable : x To record collection on receivables for second month Interest Expense Cash Loss on Sale of Receivables To record finalLpayment to Miumi

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Answer Account Name Debit Credit a Cash 612000 Note Payable 61200... View the full answer