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ABC Companies assigned $700,000 of its accounts receivable to DEF Bank as collateral for a...

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Accounting

ABC Companies assigned $700,000 of its accounts receivable to DEF Bank as collateral for a $500,000 loan. ABC will continue to collect accounts receivable, debtors are not notified of the settlement with the bank. The bank charges 1% finance charges on accounts receivable and 12% interest on the loan. ABC makes the corresponding payments to the bank when it collects its accounts receivable. Give the journal entry for ABC and the journal entry for Bank.

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