Scarbrough Corp. factored $600,000 of accounts receivable to Duff Corp. on October 1, year 2. Control was surrendered by Scarbrough. Duff accepted the receivables subject to recourse for nonpayment. Duff assessed a fee of 3% and retains a holdback equal to 5% of the accounts receivable. In addition, Duff charged 15% interest computed on a weighted-average time to maturity of the receivables of fifty-four days. The fair value of the recourse obligation is $9,000. Scarbrough will receive and record cash of $556,685

$547,685

$538,685

$529,685

Vaughn Manufacturing assigns $4570000 of its accounts receivables as collateral for a $2.99 million loan with a bank. The bank assesses a 3% finance charge on the loan amount and charges interest on the note at 5%. What would be the journal entry to record this transaction?

Debit Cash for $2026800, debit Interest Expense for $89700, debit Due from Bank for $1580000, and credit Accounts Receivable for $4570000.

Debit Cash for $2900300, debit Interest Expense for $89700, and credit Notes Payable for $2990000.

Debit Cash for $2900300, debit Interest Expense for $89700, and credit Accounts Receivable for $2990000.

Debit Cash for $2750800, debit Interest Expense for $239200, and credit Notes Payable for $2990000.

Scarbrough will receive and record cash of $538,685

The journal entry to record this transaction would be:

                             Debit        Credit  

Cash                 $2,900,300  

Interest Expense$89,700  

Notes Payable                 $2,990,000

Debit Cash for $2900300, debit Interest Expense for $89700, and credit Notes Payable for $2990000

Explanation:

In order to calculate the amount Scarbrough will receive and record cash we would have to make the following calculation:

Scarbrough will receive and record cash=Receivables-Amount of the hold back-Withheld as fee income-Less: Withheld as interest expense

Receivables=$600,000  

Amount of the hold back=$600,000 x 5%=$30,000  

Withheld as fee income=$600,000 x 3%=$18,000  

Withheld as interest expense=$600,000 × 15% × 54/365=$13,315  

Therefore, Scarbrough will receive and record cash=$600,000- $30,000-$18,000-$13,315=$538,685

Scarbrough will receive and record cash of $538,685

According to the given data to journal entry to record this transaction would be the following:

                              Debit        Credit  

Cash                 $2,900,300  

Interest Expense$89,700  

Notes Payable                 $2,990,000

Interest Expense=$2,990,000 x 3%=$89,700

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answer; (cash) is the best out of the above; good luck