On December 1, 2018, General Mole Borrowed $400,000 at 12

On December 1, 2018, General Mole borrowed $400,000 at 12% interest and pledged $500,000 in accounts receivable as collateral. Additionally, General Mole was charged a finance fee equal to 1% of the accounts receivable assigned. At the end of December, $300,000 of the assigned receivables were collected and remitted to the lender along with accrued interest.
Required:
Prepare journal entries to record the borrowing, the assignment of receivables, the collection on the receivables, and the recognition of interest expense.

Correct Answer:

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Cash 395,000
Finance charge expense 5...

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