Reference no: EM132791667

On July 1, the company assigned 1,000,000 accounts receivable to a bank under a notification arrangement. The bank loans 80% less 4% charge on the gross amount assigned. The entity signed a promissory note that provides 1% interest per month on the unpaid loan balance. On July 31, the company received notice from the bank that 600,000 of the assigned accounts were collected less 2% discount. A check was sent to the bank for the interest. On August 31, the company received notice from the bank that 300,000 of the assigned accounts were collected. Final settlement was made by the bank for the excess collections together with uncollected assigned accounts of 100,000.

Required:

Problem I. Prepare the entries for the mentioned transactions

Problem II. What is the amount of cash received from the bank?

Problem III. What is the amount of assigned accounts receivable transferred to accounts receivable?