PROBLEM CCC: MARS U,( Prepare journal entries for Mars Co. for: (a) Accounts rec

Question

PROBLEM CCC: MARS U,( Prepare journal entries for Mars Co. for: (a) Accounts receivable in the amount of $1,500,000 were assigned to Utley Finance Co. by Mars as security for a loan of$1,300,000. Utley charged a 3% commission on the accounts, the interest rate on the note is 12%. (b) During the first month, Mars collected $600,000 on assigned accounts after deducting $1,400 of discounts. Mars wrote off a $1,600 assigned account. (c) Mars paid to Utley the amount collected plus one month's interest on the note.

Explanation / Answer

a) Cash $12,55,000

Finance charges $ 45,000

( $1,500,000*3%)

Notes payable. $1,300,000

B).

Cash $600,000

Sales discounts $1,400

Allowance for doubtful debts $1,600

Accounts receivable . $603,000

C) Notes Payable. $600,000

Interest expense. $13,000

Cash . . $613,000

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