On March 1, 2018, Company A borrowed Ksh 50,000 from a bank and signed a 12% one
Question:
On March 1, 2018, Company A borrowed Ksh 50,000 from a bank and signed a 12% one month note payable. The bank charged 1% initial fee. Company A assigned Kshs 73,000 of its accounts receivable to the bank as a security. During March 2018, the company collected Kshs 70,000 of the assigned accounts receivable and paid the principle and interest on note payable to the bank on April 1. Kshs 3,000 of the sales were returned by the customers.
(a)Record the necessaryjournal entries by Company A.(6 Marks)
(b)Distinguish between Capitalization and Amortization of assets (4 Marks)
A business has a trademark which is carried in the balance sheet at Ksh 50,000.An impairment review showed that the recoverable amount is only KShs 40,000. Required: calculate the impairment and shows the specific journal entries.