Atherton Manufacturing Company sold $200,000 of accounts receivable to a factor. Pertinent facts about this transaction include the following:
1. The factored receivables had a corresponding $4,000 balance in Allowance for uncollectibles.
2. The receivables were factored on a without recourse basis with notification (that is, the customers were instructed to mail their checks directly to the factor).
3. Atherton remained responsible for sales returns, and the factor retained a 5% holdback for this purpose.
4. The factor charged 1% interest on the gross receivables factored plus a 6% factoring fee, both of which the factor deducted from the value of receivables.
5. Customers returned inventory with a $3,000 selling price. All remaining accounts were settled, and the factor paid the balance due. Assume that Atherton records sales returns only when goods are returned (that is, it does not record an allowance for sales returns).
6. The factor incurred actual bad debts of $7,500.

Required:
Provide journal entries to record:
1. The receipt of proceeds from the factor.
2. Treatment of sales returns.
3. Any other items related to the pertinent facts, including the final cash settlement from the factor.