3) Presented below is information related to Lathorp Corp., which sells merchandise with terms 2/10, net 60. Lathorp records its sales and receivables net.

Oct-1 Lathorp Corp. sold to Pittman Co. merchandise having a sales price of $10,000. 9 Specific accounts receivable of $10,000 (gross) are pledged to Aladin Credit Corp. as security for a loan of $5,000 at a finance charge of 7% of the amount of the loan. The finance company will make the collections. (All the accounts receivable are past the discount period.)

Nov-15 Lathorp Corp. factors receivables with a carrying amount of $30,000 to Anderson Inc. for $25,000 on a with recourse basis. The recourse provision has a fair value of $800. This transaction should be recorded as a sale.

Dec-31 Pittman Co.. notifies Lathorp that it is bankrupt and will pay only 15% of its account. Give the entry to write off the uncollectible balance using the allowance method. (Note: First record the increase in the receivable on Oct 11 when the discount period passed.)

Dec-31 It sold a land having a fair value of $300,000 in exchange for a 3-year zero-interest- bearing promissory note in the face amount of $399,297. The land is carried on

Lathorps book at a cost of $175,000. (Note: Lathorp recently had to pay 7% interest for money that it borrowed from NRB Bank. The customer in this transaction has credit rating that requires him to borrow money at 10% interest.

Instructions Prepare all necessary entries in general journal entries for Lathorp Corp.