Information on Ayayai Corp., which reports under ASPE, follows: July 1 Ayayai Corp. sold to Blossom Company merchandise having a sales price of $9,300, terms 2/10, n/60. Ayayai records its sales and receivables net. 3 Blossom Company returned defective merchandise having a sales price of $700. 5 Accounts receivable of $18,400 (gross) are factored with Blue Corp. without recourse at a financing charge of 9%. Cash is received for the proceeds and collections are handled by the finance company. (These accounts were subject to a 3% discount and were all past the discount period.) 9 Specific accounts receivable of $15,300 (gross) are pledged to Landon Credit Corp. as security for a loan of $11,100 at a finance charge of 3% of the loan amount plus 9% interest on the outstanding balance. Ayayai will continue to make the collections. All the accounts receivable pledged are past the discount period and were originally subject to a 3% discount. Dec. 29 Blossom Company notifies Ayayai that it is bankrupt and will be able to 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 July 11 when the discount period passed.) (a) Prepare all necessary journal entries on Ayayai Corp.'s books. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit 7/1 Accounts Receivable 9114 Sales Revenue 9114 7/3 Sales Returns and Allowances 700 Accounts Receivable 700 7/5 Cash 16744 Loss on Sale of Receivables UOUUUUUUIL 1656 Accounts Receivable 18032 Sales Discounts Forfeited 368 7/9 Accounts Receivable 368) 5 Sales Discounts Forfeited 368 (To record sales discount forfeited) (To record sales discount forfeited) 7/9 Cash 10767 Interest Expense 333 11100 Notes Payable (To record note payable) 7/11 Accounts Receivable 186 OU IDEI HODI Sales Discounts Forfeited 186 12/29 Allowance for Doubtful Accounts 6975 Accounts Receivable 6975