On August 1, 2012, Cappuccitti Company accepted a two-month, 4%, $30,000 note from a customer in settlement of the customer's account. Interest is due on the first day of each month, starting September 1. The company's yearend is August 31.

Instructions

(a) Prepare all journal entries for Cappuccitti over the term of the note. Assume that the customer settles the note in full on the maturity date. Round your answers to the nearest dollar.

(b) Assume that instead of honouring the note at maturity, the customer dishonours it. Prepare the necessary journal entry at the maturity date, October 1, 2012, assuming that eventual collection of the note is (1) expected, and (2) not expected.