Geary Co. assigned $1,600,000 of accounts receivable to Kwik Finance Co. as security for a loan of $1,340,000. Kwik charged a 2% commission on the amount of the loan; the interest rate on the note was 10%. During the first month, Geary collected $440,000 on assigned accounts after deducting $1,520 of discounts. Geary accepted returns worth $5,400 and wrote off assigned accounts totaling $11,920. Entries during the first month would include a A. debit to Accounts Receivable of $458,840. B. debit to Bad Debt Expense of $11,920. C. debit to Cash of $441,520. D. debit to Allowance for Doubtful Accounts of $11,920.

Question

Business

Skylar Long

24 December, 21:53

Geary Co. assigned $1,600,000 of accounts receivable to Kwik Finance Co. as security for a loan of $1,340,000. Kwik charged a 2% commission on the amount of the loan; the interest rate on the note was 10%. During the first month, Geary collected $440,000 on assigned accounts after deducting $1,520 of discounts. Geary accepted returns worth $5,400 and wrote off assigned accounts totaling $11,920. Entries during the first month would include a A. debit to Accounts Receivable of $458,840. B. debit to Bad Debt Expense of $11,920. C. debit to Cash of $441,520. D. debit to Allowance for Doubtful Accounts of $11,920.

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Answers (1)

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Karissa Harmon · Answer 1

Option D is correct one.

Debit to Allowance for Doubtful Accounts of $11,920

Explanation:

Allowance for doubtful accounts $11,920 Debit

Accounts Receivables $11,920 Credit