Moon Inc Assigns $1,500,000 of Its Accounts Receivables as Collateral

question 13

Multiple Choice

Moon Inc assigns $1,500,000 of its accounts receivables as collateral for a $1 million loan with a bank.The bank assesses a 3% finance fee and charges interest on the note at 6%.What would be the journal entry to record this transaction?

• A)Debit Cash for $970,000, debit Finance Charge for $30,000, and credit Notes payable for $1,000,000.
• B)Debit Cash for $970,000, debit Finance Charge for $30,000, and credit Accounts Receivable for $1,000,000.
• C)Debit Cash for $970,000, debit Finance Charge for $30,000, debit Due from Bank for $500,000, and credit Accounts Receivable for $1,500,000.
• D)Debit Cash for $910,000, debit Finance Charge for $90,000, and credit Notes Payable for $1,000,000.

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Definitions:

Insulin Deficiency

A condition characterized by the inadequate production or use of insulin, leading to elevated blood glucose levels.

Pancreas

A gland located in the abdominal cavity that plays a key role in digestion and blood sugar regulation by secreting digestive enzymes and insulin.

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A metabolic disorder characterized by high blood sugar levels over a prolonged period due to insulin resistance or inadequate insulin production.

Graves' Disease

An autoimmune disorder that leads to hyperactivity of the thyroid gland, causing symptoms like weight loss, rapid heart rate, and sweating.