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.

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Expert Solution

ekkarill92 answered 1 year ago

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