On November 1, 2010, the Gleason Firm assigns $100,000 of its accounts receivable to a finance...
On November 1, 2010, the Gleason Firm assigns $100,000 of its accounts receivable to a finance company. The finance company advances 85% of the accounts receivable assigned less a finance charge of $1,200. It also charges an annual interest rate of 12% on the outstanding loan balance. Gleason will repay the loan on December 31, 2010. How much cash will Gleason receive from the finance company on November 1, 2010?
a) $83,800
b) $81,800
c) $85,000
d) $82,100
Homework Answers
Advance = 85% of accounts receivable
= $100,000 X 85%
= $85,000
Finance charge = $1,200
Amount received from finance company = $85,000 - Finance charge
= $85,000 - $1,200
= $83,800
Option a)
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