On march 1, 2017, beijing pasta company assigns $1,400,000 of its accounts receivable to bank of china as collateral for a $1,000,000 note. bank of china assesses a finance charge of 1 percent of the accounts receivable and interest on the note of 12 percent. which of the following is correct regarding this transaction

The answer is On March 1, 2017, Beijing Pasta Company will debit Interest Expense for $14,000.

Explanation:

Interest expense is the is the cost of funds loaned to a business by a bank or lender. Here a loan is taken from Bank of China by the Beijing Pasta Company.

Bank of China assesses a finance charge of 1 percent of the accounts receivable we can calculate that this ammount is $14,000 on March 1, 2017.