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Lonergan Company occasionally uses its accounts receivable to obtain immediate cash. At the end of...

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Accounting

Lonergan Company occasionally uses its accounts receivable to obtain immediate cash. At the end of June 2024, the company had accounts receivable of $840,000. Lonergan needs approximately $560,000 to capitalize on a unique investment opportunity. On July 1,2024, a local bank offers Lonergan the following two alternatives:
Borrow $560,000, sign a promissory note, 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 9% interest on the unpaid balance of the note at the beginning of the period.
Transfer $580,000 of specific receivables to the bank without recourse. The bank will charge a 4% factoring fee on the amount of receivables transferred. The bank will collect the receivables directly from customers. The sale criteria are met.
Required:
Prepare the journal entries that would be recorded on July 1 for:
alternative a.
alternative b.
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:
alternative a.
alternative b.

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