Lee Company accepts a $27,000, four-month, 6% note receivable in settlement of an account receivable on June

Question:

Lee Company accepts a $27,000, four-month, 6% note receivable in settlement of an account receivable on June 1, 2021. Interest is to be paid at maturity. Lee Company has a December year end and adjusts its accounts annually. (Note: Lee Company uses only one allowance account for both accounts and notes receivable.)

a. Record (1) the issue of the note on June 1 and (2) the settlement of the note on October 1, assuming the note is honoured.

b. Assume instead that the note is dishonoured but eventual collection is expected. Record the October 1 journal entry.

c. Assume instead that the note is dishonoured and eventual collection is not expected. Record the October 1 journal entry.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Accounting Principles Volume 1

ISBN: 978-1119502425

8th Canadian Edition

Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak

Question Posted: