The unadjusted trial balance of Lock Corporation on December 31, 2022 included the following: Debit Credit Accounts receivable $260,000 Allowance for doubtful accounts 1,900 Sales revenue $3,540,000 Sales returns and allowances 42,000 On January 1, 2023, Lock sold $170,000 of its accounts receivable to Latch Incorporated on a with recourse basis. Latch assessed a 3% finance charge of the balance of accounts receivable and retained an amount equal to 5% of accounts receivable for possible adjustments.

Required 1. Prepare the fiscal 2022 year-end adjusting journal entry assuming that the estimate of uncollectible accounts is determined by taking 4% of gross accounts receivable. You must provide a detailed calculation of the amount. Journal entry description is not required.

2. Prepare the journal entries for Lock AND Latch to record the sale of the accounts receivable to Latch, assuming that the recourse liability had a fair value of $8,000. You must provide detailed calculations of amounts. Journal entry description is not required.