Reference no: EM132840979

Garliet Company has entered into a long-term assignment agreement with CDE Bank. Under the terms of the financing agreement, Garliet Company received 80% of the value of all accounts assigned and is charged a 2% service charge, which is based upon the amount of cash received. In addition, the CDE Bank charges Garliet 10% interest on the outstanding loan. Garliet Company will continue to collect the assigned receivables.

The following are the transactions related to the assignment:

Jan. 1, 202X - Accounts receivable of P1,000,000 are assigned.

Jan. 15, 202X - Garliet Company approves a sales return of P10,000 on the assigned accounts.

Jan. 31, 202X - Collections are made on P600,000 of assigned accounts. This amount and one month's interest on the outstanding loan nare remitted to the finance company.

Feb. 28, 202X - P300,000 of assigned accounts are collected, and the remaining loan is repaid.

Requirements:

Problem a. Prepare the journal entry on Garliet Company's book to record the transactions.

Problem b. Assuming that the assignment agreement is on a notification basis, prepare the journal entry to record the transactions in the books of Garliet Company.