Michael’s Bucket Company borrowed $350,000 from J. R. Malone Capital by issuing a 4-year (48-month), 7 % note payable. Interest is due and payable at the beginning of each month based on the outstanding balance at the beginning of the prior month. Michael’s assigns $420,000 of its accounts receivable  as collateral for the lending arrangement. At the beginning of the next month. Michel’s collects $110,000 of the receivables and rents the amount to J. R. Malone plus interest.

Required

a. Prepare the journal entries to record the lending arrangement. 

b. Prepare the journal entries to record the collection of the receivables and the payment to J.R. Malone. 

c. Indicate how accounts receivable  would be reported on Michael’s balance sheet  at the end of the year.