Question

On 1 September 2019, PANDEKA Bhd used its receivables totalling RM 350,000 as collateral on a 250,000, 15% note from Intelligent Bank. PANDEKA Bhd will continue to collect the assigned receivables. Intelligent Bank will charge 2% as a finance charge which will be deducted in advance on the 250,000 value of the note. Collections of receivables for September is RM100,000, less cash discounts of RM800. On 1 October, PANDEKA Bhd paid to the bank the amount owed for September collection plus accrued interest. During October, PANDEKA Bhd collected the remaining accounts except for RM550 written off as uncollectible. On 1 November, PANDEKA Bhd paid to Intelligent Bank the remaining account owed plus accrued interest.

REQUIRED:

Prepare the journal entries necessary for both PANDEKA Bhd and Intelligent Bank.

Answer 1

IN THE JOURNAL OF PANDEKA BHD
DATE	PARTICULARS		DEBIT	CREDIT
30.09.2019	Finance Charge	Dr.	5,000.00
	To Interest Payable	Cr.		5,000.00
	Being interest accrued for the month of September
30.09.2019	Bank/ Cash	Dr.	99,200.00
	Cash Discount	Dr.	800.00
	To Accounts Receivables	Cr.		100,000.00
	Being amount received
01.10.2019	Interest Payable	Dr.	5,000.00
	15% Note	Dr.	100,000.00
	To Intelligent Bank	Cr.		105,000.00
	Being accrued interest and amount owed to Intelligent Bank paid
30.10.2019	Bad Debts	Dr.	550.00
	To Accounts Receivables	Cr.		550.00
	Being uncollectible amount written off
30.10.2019	Bank/ Cash	Dr.	249,450.00
	To Accounts Receivables	Cr.		249,450.00
	Being amount received
30.10.2019	Finance Charge	Dr.	3,000.00
	To Interest Payable	Cr.		3,000.00
	Being interest accrued for the month of October
01.11.2019	Interest Payable	Dr.	3,000.00
	15% Note	Dr.	150,000.00
	To Intelligent Bank	Cr.		153,000.00
	Being accrued interest and amount owed to Intelligent Bank paid
			616,000.00	616,000.00

Assumptions - 2% per month is charged as finance charge

RECONICILIATION
Decription			Balance
Collateral	250000	8000	0
Receivables	350000		0
Bank		Asset	90650
Interest Exp		Revenue Exp	8000
Bad debts		Revenue Exp	550
Cash Discount		Revenue Exp	800