Lee Company accepts a $27,000, four-month, 6% note receivable in settlement of an account receivable on June 1, 2024. Interest is to be paid at maturity. Lee Company has a December 31 year end and adjusts its accounts annually.
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.