Lonergan Company occasionally uses its accounts receivable to obtain immediate cash. At the end of June 2024, the company had accounts recelvable of $820,000. Lonergan needs approximately $520,000 to capitalize on a unique investment opportunity On July 1, 2024, a local bank offers Lonergan the following two alternatives: a. Borrow $520,000, 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 12% interest on the unpaid balance of the note at the beginning of the period. b. Transfer $570,000 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 90% 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: o. altemative a. b. alternative b. Complete this question by entering your answers in the tabs below. Prepare the journal entry that would be recorded on July 1 for alternative a. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Journal entry worksheet Record the borrowing $520,000, sign a note payable, and assign the entire receivable balance as collateral. Note: Enter debits before credits. Record the collection of receivables, assuming that 90% of all June 30 receivables are collected on July 31 . Note: Enter debits before credits. Record the month-end remittance to the bank as the amount of receivables collected plus 12% interest on the unpaid balance of the note at the beginning of the period. Note: Enter debits before credits. Journal entry worksheet Record the collection of receivables, assuming that 90% of all June 30 receivables are collected on July 31 . The bank will collect the transferred recelvables directly. Note: Enter debits before credits
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