In Alzheimer's disease (AD), the formation of amyloid beta and neurofibrillary tangles (NFTs) leads to neuronal loss in entorhinal cortex (EC), a crucial brain region involved in memory and navigation. These pathological changes are concurrent with the onset of memory-related issues in AD patients with symptoms of forgetfulness such as misplacing items, disorientation in familiar environments etc. The lateral EC (LEC) is associated with non-spatial memory processing including object recognition. Since in LEC, neurons fire in response to objects (object cells) and at locations previously occupied by objects (trace cells), pathology in this region could lead to dysfunction in object location coding. In this paper we show that a transgenic mouse model, EC-App/Tau, which expresses both APP and tau primarily in the EC region, have deficits in LEC-specific memory tasks. Using in vivo single-unit electrophysiology recordings we show that the LEC neurons are hyperactive with low information content and high sparsity compared to the controls indicating poor firing fidelity. We finally show that object cells and trace cells fire less precisely in the EC-App/Tau mice compared to controls indicating poor encoding of objects. Overall, we show that AD pathology causes erratic firing of LEC neurons and object coding defects leading to LEC-specific memory impairment.