Assigning Accounts Receivable. Black Corporation has entered into a long- erm assignment agreement with a finance company. Under the terms of this ngreement, Black receives 80% of the value of all accounts assigned and is charged a 1% service charge which is based upon the actual peso amount of cash received. Additionally, the finance company charges Black 12% annual nterest on the outstanding loan. The following selected transactions relate to his agreement: Accounts receivable of P175,000 are assigned. A sales return of P1,000 on an assigned account is allowed by Black. Collections are made on P86,000 of assigned accounts. This amount and I month's interest on the outstanding loan are remitted to the finance company. (For simplicity, compute interest to the December 1, 20xs December 11, 20xs December 31, 20X5
Assigning Accounts Receivable. Black Corporation has entered into a long- erm assignment agreement with a finance company. Under the terms of this ngreement, Black receives 80% of the value of all accounts assigned and is charged a 1% service charge which is based upon the actual peso amount of cash received. Additionally, the finance company charges Black 12% annual nterest on the outstanding loan. The following selected transactions relate to his agreement: Accounts receivable of P175,000 are assigned. A sales return of P1,000 on an assigned account is allowed by Black. Collections are made on P86,000 of assigned accounts. This amount and I month's interest on the outstanding loan are remitted to the finance company. (For simplicity, compute interest to the December 1, 20xs December 11, 20xs December 31, 20X5
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Exercise 9
Assigning Accounts Receivable. Black Corporation has entered into a long-
term assignment agreement with a finance company. Under the terms of this
agreement, Black receives 80% of the value of all accounts assigned and is
charged a 1% service charge which is based upon the actual peso amount of
cash received. Additionally, the finance company charges Black 12% annual
interest on the outstanding loan. The following selected transactions relate to
this agreement:
Accounts receivable of P175,000 are assigned.
A sales return of P1,000 on an assigned account is
allowed by Black.
Collections are made on P86,000 of assigned
accounts. This amount and I month's interest on
the outstanding loan are remitted to the finance
company. (For simplicity, compute interest to the
nearest month).
P60,000 of assigned accounts are collected and the
remainder of the ioan is repaid.
December 1, 20xs
December 11, 20x5
December 31, 20X5
January 29, 20X7
Required:
1. Prepare journal entries on Black's books to record the preceding
transactions.
2. How would this assignment agreement be reported on Black's December
31, 20X5 statement of financial position (assume the note payable is
short-term)?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb342ba9e-230f-48c5-b207-eb0b7888bb30%2Fe4e542f6-9a7e-4fa0-b8be-0f777d3f15f9%2F9yy9wlf_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Exercise 9
Assigning Accounts Receivable. Black Corporation has entered into a long-
term assignment agreement with a finance company. Under the terms of this
agreement, Black receives 80% of the value of all accounts assigned and is
charged a 1% service charge which is based upon the actual peso amount of
cash received. Additionally, the finance company charges Black 12% annual
interest on the outstanding loan. The following selected transactions relate to
this agreement:
Accounts receivable of P175,000 are assigned.
A sales return of P1,000 on an assigned account is
allowed by Black.
Collections are made on P86,000 of assigned
accounts. This amount and I month's interest on
the outstanding loan are remitted to the finance
company. (For simplicity, compute interest to the
nearest month).
P60,000 of assigned accounts are collected and the
remainder of the ioan is repaid.
December 1, 20xs
December 11, 20x5
December 31, 20X5
January 29, 20X7
Required:
1. Prepare journal entries on Black's books to record the preceding
transactions.
2. How would this assignment agreement be reported on Black's December
31, 20X5 statement of financial position (assume the note payable is
short-term)?
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