a company occasionally uses its accounts receivable to obtain immediate cash. At the end of June 2021 the company had accounts receivable of $860000. they needed approximately $540000 to capitalize on a unique investment opportunity. On July 1, 2021 a local bank offers them the following two alternatives.

a. borrow $540000 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 $590000 of specific receivables to the bank without recourse. The bank will charge a 2% factoring fee on the amount of receivables transferred. The bank will collect the receivables directly from customers. the sale criteria are met.

prepare the journal entries that would be recorded on July 1, for:

a. alternative a

b. alternative b

assuming that 80% of all June 30 receivable 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