QUESTION 7 Assignment of receivables On May 1, you borrowed $500,000 from Sunny Bank on a 9% note. As part of the lending arrangement, you assigned specific receivables totaling $600,000 to Sunny Bank as collateral on the loan. You do not notify the account debtors (customers) and will continue to collect the assigned receivables. Sunny initially assesses a 2% finance charge on assigned receivables in addition to the interest on the note. You are to make monthly payments to Sunny with the cash you collect on the assigned receivables. Prepare the following journal entries. May 1 - Issuance of the note and assignment of specific receivables. May 31 - collections of assigned accounts during May were $350.000 June 1 - You pay Sunny Bank the amounts owed for May collections, plus accrued interest