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 $15,000. 9 Specific accounts receivable of $11,000 (gross) are pledged to Aladin Credit Corp. as security for a loan of $7,000 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- Lathorp Corp. factors receivables with a carrying amount of $32,000 to Anderson 15 Inc. for $27,000 on a with recourse basis. The recourse provision has a fair value of $800. This transaction should be recorded as a sale. Dec- Pittman Co.. notifies Lathorp that it is bankrupt and will pay only 15% of its account. 31 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- It sold a land having a fair value of $300,000 in exchange for a 3-year zero-interest- 31 bearing promissory note in the face amount of $399,297. The land is carried on Lathorp’s 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
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 $15,000. 9 Specific
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