Reference no: EM132829174

Dormant Company assigned certain accounts receivable to a bank for a loan on the following basis: 75% cash advance, 4% service charge on gross accounts assigned, 2% interest per month is to be charged, the bank makes the collections. The entity assigned a promissory note for the loan.

1. July 1 Received remittance upon the specific assignment of P1,500,000 in accounts to the bank.
2. Aug. 1 Received notice from the bank that P800,000 of the assigned accounts were collected. A check was sent to the bank for one month interest charged.
3. Sept. 1 Received notice from the bank that assigned accounts of P500,000 were collected in full and the remaining accounts of P200,000 were being returned. Accordingly, a check was received from the bank in settlement of the assignment contract. In making the settlement, the bank deducted the interest charged for the corresponding period.

Required:

Problem 1: Provide the necessary journal entries on the books of the assignor.