Answer:
Scarbrough will receive and record cash of $538,685
The journal entry to record this transaction would be:
Debit Credit
Cash $2,900,300
Interest Expense $89,700
Notes Payable $2,990,000
Debit Cash for $2900300, debit Interest Expense for $89700, and credit Notes Payable for $2990000
Explanation:
In order to calculate the amount Scarbrough will receive and record cash we would have to make the following calculation:
Scarbrough will receive and record cash=Receivables-Amount of the hold back-Withheld as fee income-Less: Withheld as interest expense
Receivables= $600,000
Amount of the hold back=$600,000 x 5%=$30,000
Withheld as fee income=$600,000 x 3%=$18,000
Withheld as interest expense=$600,000 × 15% × 54/365=$13,315
Therefore, Scarbrough will receive and record cash=$600,000-
$30,000-$18,000-$13,315=$538,685
Scarbrough will receive and record cash of $538,685
According to the given data to journal entry to record this transaction would be the following:
Debit Credit
Cash $2,900,300
Interest Expense $89,700
Notes Payable $2,990,000
Interest Expense=$2,990,000 x 3%=$89,700
