On July 1, 2011, McEnroe Company used receivables totaling $150,000 as collateral on a $100,000, 15% note from Standard One Bank. The transaction is not structured such that receivables are being sold. McEnroe will continue to collect the assigned receivables. In addition to the interest on the note, Standard One also receives a 2.5% finance charge, deducted in advance on the $100,000 value of the note. Additional information for McEnroe Company is as follows:

(a) July collections amounted to $91,000, less cash discounts of $575.

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

(c) McEnroe collected the remaining accounts during August except for $425 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 McEnroe Company and Standard One Bank.