RECORDING NOTES RECEIVABLE: ISSUANCE, PAYMENT, AND DEFAULT.

Marydale Products permits its customers to defer payment by giving personal notes instead of cash. All the notes bear interest at a rate of 12% per year and require the customer to pay the entire note in a single payment-6 months after issuance. Consider the following transactions, which describe Marydale’s experience with two such notes:

a) On January 31, Marydale accepts a 6-month, 12% note from customer A in lieu of a $3,600 cash payment for merchandise delivered on that day.

b) On February 28, Marydale accepts a 6-month, $2,400, 12% note from customer B in lieu of a $2,400 cash payment.

c) On July 31, customer A pays the entire note plus interest in cash.

d) On August 31, customer B is unable to pay and defaults on the note.

REQUIRED:

Prepare the journal entries required to record transactions a through d in Marydale’s records.