Its all problem 13

13. 10.00 pons Lonergan Company occasionaly uses its accounts receivable to obtain immediate cash. At the end of June 2016, the company had accounts receivable of $1,160,000. Lonergan needs approximately $690,000 to capitalize on a unique investment opportunity On July 1, 2016, a local bank offlers Lonergan the following two alternatives a Borrow $690,000, 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 8% interest on the unpaid balance of the note at the beginning of the period. Transfer S 740,000 of specific receivables to the bank without recourse. The bank wil charge a 2% factoring tee on the amount of receivables transferred The bank will collect the receivables directly from customers. The sale ariteria are met b Required: 1. & 2. Prepare the journal entries that would be recorded for each of the altematives. (if no entry is required for a transaction/event, select "No joumal entry required" in the first account field.) Altemative a View transaction list Borrow $690,000, sign a note payable, and assign the entire receivable balance as collateral. 1 le Record the collection of receivables, assuming that 70% of all June 30 receivables are collected on July 31. 2 3 At the end of each month, a remittance will be made to the bank that equals the amount of receivables collected plus 8% interest on the unpaid balance of the note at the beginning of the period. Note:-journal entry has been entered xB G w oa WEEK 1 Chapt. Solved: Im Borrow $690,000, sign a note payable, and assign the entire receivable balance as collateral. 1 le Record the collection of receivables, assuming that 70% of all June 30 receivables are collected on July 31. 2 Atthe end of each month. a remittance will be made to the bank that equals the amount of receivables collected plus 8% interest on the unpaid balance of the note at the beginning of the period. 3 Note:-journal entry has been entered Record entry Clear entry View general journal Altenative b 1 Transfer $740,000 of spedfic receivables to the bank without recourse. The bank will charge a 2% factoring fee on the amount of receivables transferred. a. The sferred Record the collection of receivables, assuming that 70% of all June 30 receivables are collected on July 31. The bank will collect the transferred receivables directly. 2 Not iumal entry has heen entererd