7-7 (Algo) Factoring versus assigning of accounts receivable [LO7-8] Lonergan Company occasionally uses its accounts receivable to obtain immediate cash. At the end of June 2021, the company had accounts receivable of $960,000. Lonergan needs approximately $590,000 to capitalize on a unique investment opportunity. On July 1, 2021, a local bank offers Lonergan the following two alternatives: a. Borrow $590,000, sign a note payable, and assign the entire receivable balance as collateral. At the end of each month, a remittance will be made to the bank that equals the amount of receivables collected plus 12% interest on the unpaid balance of the note at the beginning of the period. b. Transfer $640,000 of specific receivables to the bank without recourse. The bank will charge a 4% factoring fee on the amount of receivables transferred. The bank will collect the receivables directly from customers. The sale criteria are met. Required: 1. Prepare the journal entries that would be recorded on July 1 for a. alternative a. b. alternative b. 2. Assuming that 80% of all June 30 receivables are collected during July, prepare the necessary journal entries to record the collection and the remittance to the bank for: a. alternative a. b. alternative b. Complete this question by entering your answers in the tabs below. Req 1A Req 18 Req 2A Req 28 Prepare the journal entries that would be recorded on July 1 for alternative a. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record the borrowing $590,000, sign a note payable, and assign the entire receivable balance as collateral. Note: Enter debits before credits b. alternative b. 2. Assuming that 80% of all June 30 receivables are collected during July, prepare the necessary journal entries to record the collection and the remittance to the bank for: a. alternative a. b. alternative b. Complete this question by entering your answers in the tabs below. Req 1A Req 18 Req 2A Req 28 Prepare the journal entries that would be recorded on July 1 for alternative a. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record the borrowing $590,000, sign a note payable, and assign the entire receivable balance as collateral. Note: Enter debits before credits. Date July 01, 2021 General Journal Debit Credit Req 1A Req 18 Req 2A Req 28 Prepare the journal entries that would be recorded on July 1 for alternative b. (If no entry is required for a transaction/event, sel journal entry required" in the first account field.) View transaction list Journal entry worksheet Record the transfer $640,000 of specific receivables to the bank without recourse. The bank will charge a 4% factoring fee on the amount of receivables transferred. Note: Enter debits before credits. Date July 01, 2021 General Journal Debit Credit Record entry Clear entry View general journal Req 1A Req 18 Req 2A Req 28 Assuming that 80% of all June 30 receivables are collected during July, prepare the necessary journal entries to record the collection and the remittance to the bank for alternative a. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 2 Record the collection of receivables, assuming that 80% of all June 30 receivables are collected on July 31. Note: Enter debits before credits. Date July 31, 2021 General Journal Debit Credit Record entry Clear entry View general journal Req 1A Req 18 Req 2A Rg 28 Assuming that 80% of all June 30 receivables are collected during July, prepare the necessary journal entries to record the collection and the remittance to the bank for alternative b. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record the collection of receivables, assuming that 80% of all June 30 receivables are collected on July 31. The bank will collect the transferred receivables directly. Note: Enter debits before credits Date: July 31, 2021 General Journal Debit Credit Record entry Clear entry View general journal