Somber Company borrows $892,000 from Silver Financing Associates by securing a revolving line of credit at a 9% interest rate on April 15. Interest is due and payable at the end of each month based on the outstanding balance at the beginning of the month. Somber assigns $939,000 of its accounts receivable as collateral for the lending arrangement. Assume that accounts receivable are collected at the end of the month and the proceeds are remitted to Silver at the end of the month. Month Accounts Receivable Collected April 140,000 May 490,000 June 117,000 Requirements a. Compute the balance of notes payable at the end of each month. b. Prepare the necessary journal entries for these transactions. c. If the accounts receivable had been pledged as​ collateral, what entry would be made at April​ 15? A:   Notes       Notes   Payable   Accounts   Payable   Beginning Interest Receivable Cash Paid Ending Month Balance Expense Collected to Silver Balance April           May           June

Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter6: Cash And Receivables
Section: Chapter Questions
Problem 10RE: On December 1 of the current year, Jordan Inc. assigns 125,000 of its accounts receivable to...
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Somber Company borrows $892,000 from Silver Financing Associates by securing a revolving line of credit at a 9% interest rate on April 15.

Interest is due and payable at the end of each month based on the outstanding balance at the beginning of the month. Somber assigns $939,000 of its accounts receivable as collateral for the lending arrangement. Assume that accounts receivable are collected at the end of the month and the proceeds are remitted to Silver at the end of the month.

Month Accounts Receivable Collected
April 140,000
May 490,000
June 117,000

Requirements
a.
Compute the balance of notes payable at the end of each month.
b.
Prepare the necessary journal entries for these transactions.
c.
If the accounts receivable had been pledged as​ collateral, what entry would be made at April​ 15?

A:
 
Notes
 
 
 
Notes
 
Payable
 
Accounts
 
Payable
 
Beginning
Interest
Receivable
Cash Paid
Ending
Month
Balance
Expense
Collected
to Silver
Balance
April
 
 
 
 
 
May
 
 
 
 
 
June
 
 
 
 
 
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