Question:
Prepare journal entries for Marcey Co. for:
(a) Accounts receivable in the amount of $1,000,000 were assigned to Utley Finance Co. by Mars as security for a loan of $850,000. Utley charged a 3% commission on the accounts; the interest rate on the note is 12%.
(b) During the first month, Mars collected $400,000 on assigned accounts after deducting $900 of discounts. Mars wrote off a $1,060 assigned account.
(c) Mars paid to Utley the amount collected plus one month's interest on the note.