Question

Thanks for helping with this accounting problem!

please answer all 4 requirements.

Thank you!

Lonergan Company occasionally uses its accounts receivable to obtain immediate cash. At the end of June 2021, the company had accounts receivable of $940,000. Lonergan needs approximately $580,000 to capitalize on a unique investment opportunity. On July 1, 2021, a local bank offers Lonergan the following two alternatives: a. Borrow $580,000, 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 12% interest on the unpaid balance of the note at the beginning of the period. b. Transfer $630,000 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 a, alternative a b. alternative b. Complete this question by entering your answers in the tabs below. Reg 1A Reg 1B Reg 2A Req 2B

Answer 1

Date	Particulars				Debit	credit
Alternative - A
01-Jul	cash				580000
	notes payable					580000
Alternative - B
01-Jul	cash				617400
	loss on transfer of receivable(630000*2%)				12600
	accounts receivable					630000
2)
Alternative - A
01-Jul	cash (940000*90%)				846000
	accounts receivable					846000
31-Jul	interest expenses (580000*12%*1/12)				5800
	notes payable				580000
	cash					585800
Alternative - B
31-Jul	cash (940000-630000)*90%				279000
	accounts receivable					279000