Geary Co Assigned $800,000 of Accounts Receivable to Kwik Finance Co

question 87

Multiple Choice

Geary Co. assigned $800,000 of accounts receivable to Kwik Finance Co. as security for a loan of $670,000. Kwik charged a 2% commission on the amount of the loan; the interest rate on the note was 10%. During the first month, Geary collected $220,000 on assigned accounts after deducting $760 of discounts. Geary accepted returns worth $2,700 and wrote off assigned accounts totaling $5,960.Entries during the first month would include a

• A) debit to Cash of $220,760.
• B) debit to Bad Debt Expense of $5,960.
• C) debit to Allowance for Doubtful Accounts of $5,960.
• D) debit to Accounts Receivable of $229,420.

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