Accounting for Notes Receivable-Honoured and Dishonoured}

Yarnell Electronics sells computer systems to small businesses and has a December 31 year-end. Yarnell engaged in the following activities involving notes receivable:

a. On November 1, 2018, Yarnell sold a \(\$ 5,000\) system to Rosen Company. Rosen gave Yarnell a six-month, \(9 \%\) note as payment.

b. On December 1, 2018, Yarnell sold an \(\$ 8,000\) system to Searfoss Inc. Searfoss gave Yarnell a nine-month, \(8 \%\) note as payment.

c. On May 1, 2019, Rosen paid the amount due on its note.

d. On September 1, 2019, Searfoss paid the amount due on its note.

\section*{Required:}

1. Prepare the necessary journal and adjusting entries for Yarnell Electronics to record these transactions.

2. Prepare the journal entries to record both a note default by Rosen on May 1, 2019, and a note default by Searfoss on September 1, 2019. Assume the note default is deemed collectible.

\section*{Problem