Reference no: EM133125368
Question - Azure Inc. assigns $4,000,000 of its accounts receivables as collateral for a $3 million loan with a bank. The bank assesses a 3% finance charge on the loan amount and charges interest on the note at 7%. What would be the journal entry to record this transaction?
a) Debit Cash for $1,910,000, debit Interest Expense for $90,000, debit Due from Bank for $1,000,000, and credit Accounts Receivable for $3,000,000.
b) Debit Cash for $2,720,000, debit Interest Expense for $280,000, and credit Notes Payable for $3,000,000.
c) Debit Cash for $2,910,000, debit Interest Expense for $90,000, and credit Accounts Receivable for $3,000,000.
d) Debit Cash for $2,910,000, debit Interest Expense for $90,000, and credit Notes Payable for $3,000,000.
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