Assigning Accounts Receivable
Response to the following problem:
The Furman Corporation entered into an assignment agreement with a finance company whereby Furman would be advanced 80% of all accounts assigned, less a $2,000 service charge. During the year, $300,000 of accounts receivable were assigned, $220,000 collections were made on outstanding assigned accounts, and $210,000 was remitted to the finance company. This remittance included interest charges of $2,100. Sales returns and allowances on assigned accounts amounted to $5,000.
Required
1. Prepare the journal entries necessary to record the preceding information.
2. Show how the preceding information would be reported on Furman's year-end balance sheet (assume the note payable is short-term).