At the beginning of April of the current year, Nickel Pork Corp. borrowed 1,000,000 for 1 yr from EastWest Beynk with an interest rate of 11.99%. As a security, the company hypothecated its accounts receivable amounting to 1,500,000. In advance, the EastWest deducted a year interest. Questions: 1. Journal entry on April 1, in relation to the hypothecation of the accounts receivable. 2. Assume that amortization of interest deducted in advance is to be made equally for the entire loan term. Prepare the journal entry on December 31 of the current year.
At the beginning of April of the current year, Nickel Pork Corp. borrowed 1,000,000 for 1 yr from EastWest Beynk with an interest rate of 11.99%. As a security, the company hypothecated its accounts receivable amounting to 1,500,000. In advance, the EastWest deducted a year interest. Questions: 1. Journal entry on April 1, in relation to the hypothecation of the accounts receivable. 2. Assume that amortization of interest deducted in advance is to be made equally for the entire loan term. Prepare the journal entry on December 31 of the current year.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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At the beginning of April of the current year, Nickel Pork Corp. borrowed 1,000,000 for 1 yr from EastWest Beynk with an interest rate of 11.99%. As a security, the company hypothecated its accounts receivable amounting to 1,500,000. In advance, the EastWest deducted a year interest.
Questions:
1. Journal entry on April 1, in relation to the hypothecation of the accounts receivable.
2. Assume that amortization of interest deducted in advance is to be made equally for the entire loan term. Prepare the journal entry on December 31 of the current year.
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