1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
stiks02 [169]
3 years ago
12

Lonergan Company occasionally uses its accounts receivable to obtain immediate cash. At the end of June 2021, the company had ac

counts receivable of $920,000. Lonergan needs approximately $570,000 to capitalize on a unique investment opportunity. On July 1, 2021, a local bank offers Lonergan the following two alternatives:
A. Borrow $570,000, sign a note payable, and assign the entire receivable balance as collateral. At the end of each month, a remittance will be made to the bank that equals the amount of receivables collected plus 10% interest on the unpaid balance of the note at the beginning of the period.
B. Transfer $620,000 of specific receivables to the bank without recourse. The bank will charge a 3% factoring fee on the amount of receivables transferred. The bank will collect the receivables directly from customers. The sale criteria are met.
Required:
1. Prepare the journal entries that would be recorded on July 1 for:
a. alternative a.
b. alternative b.
2. Assuming that 70% of all June 30 receivables are collected during July, prepare the necessary journal entries to record the collection and the remittance to the bank for:____.
a. alternative a.
b. alternative b.
Business
1 answer:
n200080 [17]3 years ago
7 0

Answer:

1.

ALTERNATIVE A

01-Jul

Dr Cash $570,000

Cr Notes Payable $570,000

ALTERNATIVE B

01-Jul

Dr Cash 601,400

Dr Loss on sale of receivables $18,600

Cr Accounts Receivables $620,000

2.

ALTERNATIVE A

Dr Cash $644,000

Cr Notes Payable $644,000

Dr Interest Expense $4,750

Dr Notes Payable 570,000

Cr Cash 574,750

ALTERNATIVE B

Dr Cash $210,000

Cr Accounts Receivable $210,000

Explanation:

1. Preparation of the journal entries that would be recorded on July 1 for alternative a and

alternative b.

ALTERNATIVE A

01-Jul

Dr Cash $570,000

Cr Notes Payable $570,000

(Notes payable collected)

ALTERNATIVE B

01-Jul

Dr Cash 601,400

($620,000-$18,600)

Dr Loss on sale of receivables $18,600 (3%*$620,000)

Cr Accounts Receivables $620,000

(Remittance to bank)

2. Preparation of the necessary journal entries to record the collection and the remittance to the bank for alternative a and

alternative b.

ALTERNATIVE A

Dr Cash (920,000 x 70%) $644,000

Cr Notes Payable $644,000

Dr nterest Expense($570,000 x 10%x 1/12) $4,750

Dr Notes Payable 570,000

Cr Cash 574,750

($570,000+$4,750)

ALTERNATIVE B

Dr Cash [ (920,000 -620,000)x 70%] $210,000

Cr Accounts Receivable $210,000

You might be interested in
Which computer science professor has won an Oscar?<br> Gauss<br> Fedkiw<br> Pythagoras<br> Edison
alina1380 [7]

Answer:

the answer is Fedkiw

Explanation:

6 0
3 years ago
Dr. Shetty is able to drive down the cost of complex medical procedures from $100,000 to $2,000 not by doing one big thing, but
melomori [17]

Answer:

C. Process Innovation.

Explanation:

As Dr. Shetty is able to drive down the cost of complex medical procedures from $100,000 to $2,000 not by doing one big thing, but rather by doing a thousand small things. This approach focuses on driving down the cost of healthcare through process innovation. Process innovation is the mechanism when we implement a new or significantly improved manufacturing method with the help of a new technology in order to remain competitive and meet consumers demands at the same time. We try to solve an already existing issue or reforms an existed process in a different way to generate something with huge benefits, likewise, same is the case here with Dr. Shetty who has reduced the cost of healthcare quite significantly just by changing and improving his production methods.

7 0
3 years ago
Sheridan Company had the following transactions during the quarter end:
White raven [17]

Answer:

Payment of insurance premium include in last quarter = $204,000

Explanation:

Given:

Insurance premium during the year = $816,000

Number of quarter in the year = 4

Computation of payment include in last quarter:

Payment of insurance premium include in last quarter = Insurance premium during the year / Number of quarter in the year

Payment of insurance premium include in last quarter = $816,000 / 4

Payment of insurance premium include in last quarter = $204,000

8 0
3 years ago
Economists use the distinction between private and public goods to determine __________
Butoxors [25]

Economists use the distinction between private and public goods to determine what projects and activities should be undertaken by the government.

In the economy, there are different types of goods among which, public goods are goods which are produced by the government or by nature for the welfare of the people without any cost. On the other hand, private goods are the ones manufactured and sold by private companies to earn a profit.

Economists use this distinction between different goods to allow the government to decide which goods are considered public goods so that the government can channel the funds in order to provide the public goods to the economy.

Hence, both public and private goods have their own importance in the economy.

To learn more about public and private goods here:

brainly.com/question/15176802

#SPJ4

8 0
2 years ago
Suppose this monopolist can price discriminate across its customers and sets 2 prices in the market. Let P M represent the stand
Orlov [11]

Answer:

hello your question is incomplete attached below is the missing part

answer: Pd = 1658 , Qd = 42

Explanation:

The monopolist will choose a discount price of ( Pd ) = 1658 and sell 42 units of the good in the discount market

since the standard price is at $1800 and the Qm ( standard monopoly quantity) is at 200 for the Monopoly to be profitable the amount of good to be sold to customers with reservation prices greater than or equal to standard price should be greater than the good offered at discount price and also the discount price after using a coupon should be lower than the standard price (Pm)

5 0
3 years ago
Other questions:
  • Fifty-two year old Nicolas worked as an operations manager in Austell steel plant. The working conditions at Austell were quite
    10·1 answer
  • Managers must have the tools and resources necessary to "steer" the organization through future unknown conditions and often thr
    15·1 answer
  • Your Aunt Elsa has $500,000 invested at 6.5%, and she plans to retire. She wants to withdraw $40,000 at the beginning of each ye
    6·1 answer
  • Role of a veterinary doctor in rearing livestock effectively
    15·1 answer
  • Ariel is saving money to purchase a new computer before she leaves for college in two years. She wants to open a special account
    9·1 answer
  • Due to a recession in the United States and abroad, ski resorts have suffered from a lack of guests during the peak season. Thes
    5·1 answer
  • _______ segmentation is used when the firm can identify a group of consumers with common needs and wants that spans the entire g
    15·1 answer
  • Inferior company sells products that are poorly made. jack, who has never bought an inferior product, files a suit against infer
    10·1 answer
  • Samson Enterprises issued a ten-year, $20 million bond with a 10% interest rate for $19,500,000. The entry to record the bond is
    9·1 answer
  • Dilly Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow: Sales are budgeted
    13·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!