Information on Novak Corp., which reports under ASPE, follows:

July 1

: Novak Corp. sold to Wildhorse Co. merchandise having a sales price of $9,200, terms 2/10, n/60. Novak records its sales and receivables net.

July 3:

Wildhorse Co. returned defective merchandise having a sales price of $600.

July 5:Accounts receivable of $18,000 (gross) are factored with Pina 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 2% discount and were all past the discount period.)

July 9: Specific accounts receivable of $14,500 (gross) are pledged to Landon Credit Corp. as security for a loan of $10,900 at a finance charge of 3% of the loan amount plus 9% interest on the outstanding balance. Novak will continue to make the collections. All the accounts receivable pledged are past the discount period and were originally subject to a 2% discount.

Dec 29: Wildhorse Co. notifies Novak that it is bankrupt and will be able to pay only 13% 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.)

REQUIRED:

Prepare all necessary journal entries on Novak Corp.s books under ASPE.