July 1 Sanford Corp. sold to Legler Co. merchandise having a sales price of $13,000 with terms 2/10, net/60. Sanford records its sales and receivables net.
5 Accounts receivable of $14,600 (gross) are factored with Rothchild Credit Corp. without recourse at a financing charge of 9%. Cash is received for the proceeds; collections are handled by the finance company. (These accounts were all past the discount period. The company has not yet recorded the Forfeited Sales Discount.)
9 Specific accounts receivable of $10,400 (gross) are pledged to Rather Credit Corp. as security for a loan of $6,500 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. The company has not yet recorded the Forfeited Sales Discount.)
Dec. 29 Legler Co. notifies Sanford that it is bankrupt and will pay only 20% of its account. Give the entry to write off the uncollectible balance using the allowance method.
Prepare all necessary entries in general journal form for Sanford Corp.