Lincraft Corp. reports a current ratio of $3-$to$-1$ in its $202$ financial statements. The statement of financial position shows current assets of $$3,146,500$ and current liabilities of $$1,070,100.$ Lincraft has accounts receivable of $$1,307,300.$ The company transfers $$1,010,000$ of these accounts receivable to a financial institution. There are $$35,600$ of bad debts associated with these accounts receivable, an amount that is already in the allowance for doubtful accounts. Proceeds of $$900,450$ are received from the transfer. The transfer is on a non$-$notification basis, which means that the customers pay Lincraft and Lincraft then remit the cash to the financial institution. The customers pay $$948,400$ to Lincraft on schedule, $$35,600$ is written off to the allowance at the appropriate time, and the cash remittance is forwarded to the financial institution.

Required:

Record all journal entries for the sequence of events assuming:

a$.$ The transfer is recorded as a sale$/$derecognition$.($If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field.$)$

b$.$ The transfer is recorded as a borrowing. $($If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field.$)$

Journal entry worksheet

$1$

$2$

$3$

$4$

$5$

Record the $$948,400$ note payable signed on the $$900,450$ received from the transfer.

Calculate the current ratio, after the initial entry for the transfer, recorded as a sale$/$derecognition and as a borrowing. $($Rouns answers to $2$ decimal places.$)$

$\backslash$table$[[,$Current Ratio$],[$Sale$/$derecognition$,],[$Borrowing$,]]$