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Prepare the journal entry to record payment

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On April 1, 2017, Indigo Company assigns $520,500 of its accounts receivable to the Third National Bank as collateral for a $340,400 loan due July 1, 2017. The assignment agreement calls for Indigo to continue to collect the receivables. Third National Bank assesses a finance charge of 3% of the accounts receivable, and interest on the loan is 10% (a realistic rate of interest for a note of this type).

On July 1, 2017, Indigo paid Third National all that was due from the loan it secured on April 1, 2017. Prepare the journal entry to record this payment.

Reference no: EM131803116

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