On June 30, year 1, Apaca Shoes had outstanding accounts receivable of $500,000. On July 1, year 1, the company borrowed $350,000 from the EX Finance Corporation and signed a promissory note. Interest at 11% is payable monthly. The company assigned specific receivables totaling $500,000 as collateral for the loan. EX Finance charges a finance fee equal to 2% of the accounts receivable assigned.

Required:

Prepare the journal entry to record the borrowing on the books of Apaca Shoes.