Softa Company borrows 850 000 from Deer Financing

Associates by #3047
Softa Company borrows $ 850,000 from Deer Financing Associates by securing a revolving line
of credit at a 6% interest rate on April 15. Interest is due and payable at the end of each month
based on the outstanding balance at the beginning of the month. Softa assigns $ 900,000 of its
accounts receivable as collateral for the lending arrangement. Assume accounts receivable are
collected at the end of the month and the proceeds are remitted to Deer at the end of the
month. Below is a listing of payments collected on accounts receivable.Month Accounts
Receivable CollectedApril ……………………………. $ 100,000May …………………………….. 487,000Ju
…………………………….. 113,000Requireda. Compute the balance of notes payable at the end of each
month. b. Prepare the necessary journal entries for these transactions. c. If the accounts
receivable had been pledged as collateral, what entry would be made at April 15?View Solution:
Softa Company borrows 850 000 from Deer Financing Associates by

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