Business, 14.11.2019 22:31 keenonwhite2612

Lonergan company occasionally uses its accounts receivable to obtain immediate cash. at the end of june 2021, the company had accounts receivable of $1,100,000. lonergan needs approximately $660,000 to capitalize on a unique investment opportunity. on july 1, 2021, a local bank offers lonergan the following two alternatives: borrow $660,000, 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 14% interest on the unpaid balance of the note at the beginning of the period. transfer $710,000 of specific receivables to the bank without recourse. the bank will charge a 2% 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.

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Lonergan company occasionally uses its accounts receivable to obtain immediate cash. at the end of j...