Problem 1

On September 1, 2020, Rayhak Company assigned specific receivables totaling to P750,000 to Pak Bank as a collateral on a P625,000, 12% loan. Rayhak will continue to collect the assigned accounts receivable. The bank also assessed a 2% service charge on the total accounts receivable assigned. Rayhak is to make monthly payments to the bank with the cash collected on the assigned accounts receivable. Collections of assigned account during September 2020 totaled P260,000 gross of cash discounts amounting to P3,500. Prepare all the journal entries relating to the problem for the month of September 2020. (Books of Rayhak