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Sav [38]
3 years ago
11

On April 1, 2014, Prince Company assigns $500,000 of its accounts receivable to the Third National Bank as collateral for a $300

,000 loan due July 1, 2014. The assignment agreement calls for Prince Company to continue to collect the receivables. Third National Bank assesses a finance charge of 2% of the accounts receivable, and interest on the loan is 10% per annum(a realistic rate of interest for a note of this type).(a) Prepare the April 1, 2012, journal entry for Prince Company
(b) Prepare the journal entry for Prince
Business
1 answer:
____ [38]3 years ago
4 0

Answer:

Explanation:

The journal entries are shown below:

a) April 1, 2012;

Dr Cash A/C. $290,000

Dr finance charge $10,000

Cr payable $300,000

($500,000 × 2% = $10,000)

b)

Dr Cash A/c $350,000

Cr Account receivable $350,000

c)

Dr payable $300,000

Dr interest expense $7,500

Cr Cash $307,500

(10% × $300,000 × 3/12 = $7,500)

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Answer:

Date      Particular                                       Dr.        Cr.

Jul-1       Treasury stock                          $6,210

             Cash                                                         $6,210

Sep-1     Cash                                          $4,840

             Treasury stock                                         $3,960

             Paid-in capital - Treasury stock              $880

Explanation:

Treasury stocks are the company's own shares which is repurchased by the company. It is recorded in treasury shares account which is an contra equity account. I can be reissued or cancelled by the company.

Purchase of Treasury Stock

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Sales of Treasury Stock

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Treasury Stock = 440 x $9 = $3,960

Paid-in capital - Treasury stock = 440 x $2 = $880

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What is the most likely option an individual might research if saving for a short term goal
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For short term financial goals, it would be best to put the money in an investment that earns the highest interest while still remaining <em>liquid (</em>aka easy to withdraw your money when you want). In this case some good options would be a high-interest earning savings or money market account.

For short term goals you want to avoid investments that require you to tie your money up for long periods of time like bonds or certificates of deposit.

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The given approach would be "Proxy indicators".

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