sawyer s fence company borrowed 240 000 from hannibal capital by issuing a 3 year 36 4373964

Sawyer’s Fence Company borrowed $ 240,000 from Hannibal Capital by issuing a 3- year (36- month), 6% 3-year (36-month), 6 % note payable. Sawyer’s uses $ 270,000 of its accounts receivable as collateral for the lending arrangement, transferring the right to the receivable payments if Sawyer defaults on the loan. Sawyer services the accounts receivable, sending bills and collecting the payment from customers. Sawyer must pay Hannibal $ 7,500 at the end of month regardless of the amount of the receivables it collects. At the end of the first month, Sawyer has collected $ 7,000 of the receivables that are collateral for the loan and pays $ 7,500 to Hannibal plus interest. Required a. Determine whether Sawyer’s borrowing from Hannibal would be treated as a borrowing or sale under U. S. GAAP. Prepare any journal entries needed at the initiation of the arrangement. b. Prepare the journal entries to record the collection of the receivables and the payment to Hannibal. View Solution:
Sawyer s Fence Company borrowed 240 000 from Hannibal Capital by

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