Reference no: EM132688464

Jason Co. assigned $1,000,000 of accounts receivable to Easy Finance Co. as security for a loan of $840,000. Easy charged a 2% commission on the amount of the loan; the interest rate on the note was 10%. During the first month, Jason collected $220,000 on assigned accounts after deducting $760 of discounts. Jason accepted returns worth $2,700 and wrote off assigned accounts totaling $7,400.

Problem 1: The amount of cash Jason received from Easy at the time of the transfer was

a. $756,000.

b. $820,000.

c. $823,200.

d. $840,000.

Problem 2: Entries during the first month would include a

a. debit to Cash of $220,760.

b. debit to Bad Debt Expense of $7,400.

c. debit to Allowance for Doubtful Accounts of $7,400.

d. debit to Accounts Receivable of $230,860.