Lonergan Company occasionally uses its accounts receivable to obtain immediate cash. At the end of June $2021,$ the company had accounts receivable of $$1,140,000.$ Lonergan needs approximately $$680,000$ to capitalize on a unique investment opportunity. On July $1,2021,$ a local bank offers Lonergan the following two alternatives:

Borrow $$680,000,$ 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.

Transfer $$730,000$ of specific receivables to the bank without recourse. The bank will charge a $3\%$ 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$.$