Imagine you are a financial analyst at Serrano Company, a company operating in a highly competitive industry. You have just been approached by the company's president with two important questions regarding their recent financial transactions and revenue recognition practices. Your task is to research the related Generally Accepted Accounting Principles (GAAP) and provide clear explanations for both of these questions.

Question 1: Serrano Company has obtained money from a large bank by using some of its receivables as collateral. The company has transferred $100,000 of its receivables to the bank and is responsible for all bad debts, estimated to be 2% of the receivables amount. How should Serrano account for and record this transaction? Please refer to the applicable GAAP paragraph numbers in your response.

Question 2: Serrano Company is engaging in a practice known as "trade loading," where they are shipping extra cases of inventory to distributors' warehouses and recording them as sales. The company hopes that this practice will increase sales of all their brands. Can these shipments be recognized as revenue? Provide a detailed explanation based on the relevant GAAP principles and cite the paragraph numbers that support your response. To complete this activity, you will need to research and analyze the GAAP principles related to the recording of receivables, bad debts, and revenue recognition. Additionally, you should consider the ethical implications of Serrano Company's practices and their financial impact.

Submission Criteria: Your main post should include a clear and well-structured response to both questions, including relevant GAAP principles and their respective paragraph numbers. While use can use various sources to conduct your research, the FASB Accounting Standards Codification, is the primary source of GAAP. Your response should be supported by evidence and demonstrate a thorough understanding of the topic. If you use external sources, provide proper citations.