On October 1, 2014, Gator Inc assigns $1,600,000 of its accounts receivable to American Bank as collateral for a $1,200,000 loan. The bank assesses a finance charge of 2% of the receivables assigned and interest on the note of 7%. On December 31, 2014 Gator inc collects $700,000 of the assigned receivables and remits those collections and the accrued interest to the bank.
Prepare the required journal entries for Gator Inc on October 1, 2014 and December 31, 2014.