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Prepare the journal entries to record Payment to Howard Bank

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Question - On April 1, 2012, A & D Company assigns $600,000 of its accounts receivable to the Howard Bank as collateral for a $525,000 loan due July 1, 2012. The assignment agreement calls for A & D Company to continue to collect the receivables. During the period A & D collected $375,000 of the accounts receivable. On July 1, 2012, A & D paid Howard Bank all that was due from the loan it secured on April 1, 2012. Howard Bank assesses a finance charge of 3% of the accounts receivable, and interest on the loan is 9%.

Required - Prepare the following journal entries to record:

1. April 1, 2012, journal entry for A & D Company.

2. The collection of the accounts receivable during the period.

3. Payment to Howard Bank on July 1, 2012.

Reference no: EM132707577

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