Finance charge is the interest cost that a business or person pays to the lender against the borrowed amount. If a person signs a bank loan of $50,000 that has an 8% interest rate, the finance charge will be $4,000 per year. Similarly, a company raised a debt of $500 million by issuing 6% debentures paying interest annually. In this case, the finance charge will be $30 million every year.
Finance charge is an item of profit and loss account and it is deducted from operating profit before interest and taxes. The finance charge is a mandatory item to be paid to lenders and also it is important for ordinary shareholders because the higher the interest or finance cost the lower the profit available to ordinary shareholders will be.
The trial balance before adjustment for Phil Collins Company shows the following
1. The Massachusetts Bay Transit Authority (MBTA) awarded the
For this problem use the Metaphor-Trans-All file in
Salen Company finances some of its current operations by assigning accounts receivable
Chessman Corporation factors $600,000 of accounts receivable with Liquidity
Arness Woodcrafters sells $250,000 of receivables to Commercial Factors
Presented below is information related to James Garfield Corp.July
Use the information for Jones Company as presented in E7-20
Wood Incorporated factored $150,000 of accounts receivable with Engram
Beyoncé Corporation factors $175,000 of accounts receivable with Kathleen
