On October 1, 2021, COVID Co. borrowed a $500,000 note at 12% interest and pledged $600,000...

On October 1, 2021, COVID Co. borrowed a $500,000 note at 12% interest and pledged $600,000 in accounts receivable as collateral. Additionally, COVID Co. was charged a finance fee equal to 1% of the borrowed amount. At the end of November, $400,000 of the assigned receivables were collected and remitted to the lender along with accrued interest.

Required:

Prepare journal entries to (A) record the borrowing, the assignment of receivables, (B) the collection on the receivables, and (C) the recognition of interest expense and remittance to the lender.

Expert Solution

ekkarill92 answered 1 year ago

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