On July 1, 2008, Balmforth Company used receivables totaling $200,000 as collateral on a $150,000, 16% note from Rocky Mountain Bank. The transaction is not structured such that receivables are being sold. Balmforth will continue to collect the assigned receivables. In addition to the interest on the note, Rocky Mountain also receives a 2% finance charge, deducted in advance on the $150,000 value of the note. Additional information for Balmforth Company is as follows:

(a) July collections amounted to $145,000, less cash discounts of $750.

(b) On August 1, paid bank the amount owed for July collections plus accrued interest on note to August 1.

(c) Balmforth collected the remaining accounts during August except for $550 written off as uncollectible.

(d) On September 1, paid bank the remaining amount owed plus accrued interest.

Instructions:

Prepare the journal entries necessary to record the preceding information on the books of both Balmforth Company and Rocky Mountain Bank.