Information on Pronghorn Corp., which reports under ASPE, follows: July 1 Pronghorn Corp. sold to Crane Company merchandise having a sales price of $8,900, terms 2/10, n/60. Pronghorn records its sales and receivables net. 3 Crane Company returned defective merchandise having a sales price of $800 5 Accounts receivable of $19,100 (gross) are factored with Monty Corp. without recourse at a financing charge of 8%. 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.) 9 Specific accounts receivable of $15,300 (gross) are pledged to Landon Credit Corp. as security for a loan of $10,700 at a finance charge of 3% of the loan amount plus 8% interest on the outstanding balance. Pronghorn 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 Crane Company notifies Pronghorn 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.) Account Titles and Explanation Debit Credit Date Accounts Receivable 8,722 7/1 8,722 Sales Revenue 7/3 Sales Returns and Allowances 800 Accounts Receivable 800 17,572 7/5 Cash 1,528 Finance Expense Accounts Receivable 17,572 Loss on Sale of Receivables 1,528 Sales Discounts Forfeited 7/5 382 Sales Discounts Forfeited 382 (To record sales discount forfeited) 7/9 (To record note payable) Information on Pronghorn Corp., which reports under ASPE, follows: July 1 Pronghorn Corp. sold to Crane Company merchandise having a sales price of $8,900, terms 2/10, n/60. Pronghorn records its sales and receivables net. 3 Crane Company returned defective merchandise having a sales price of $800 5 Accounts receivable of $19,100 (gross) are factored with Monty Corp. without recourse at a financing charge of 8%. 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.) 9 Specific accounts receivable of $15,300 (gross) are pledged to Landon Credit Corp. as security for a loan of $10,700 at a finance charge of 3% of the loan amount plus 8% interest on the outstanding balance. Pronghorn 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 Crane Company notifies Pronghorn 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.) Account Titles and Explanation Debit Credit Date Accounts Receivable 8,722 7/1 8,722 Sales Revenue 7/3 Sales Returns and Allowances 800 Accounts Receivable 800 17,572 7/5 Cash 1,528 Finance Expense Accounts Receivable 17,572 Loss on Sale of Receivables 1,528 Sales Discounts Forfeited 7/5 382 Sales Discounts Forfeited 382 (To record sales discount forfeited) 7/9 (To record note payable)