Far Corners Imports sells a variety of merchandise to retail stores on open account, but it insists that any customer who fails to pay an invoice when due must replace it with an interest-bearing note. The company adjusts and closes its accounts at December 31 . Among the transactions relating to notes receivable were the following: Sept. 1 Reccived from a customer (Party Plus) a nine-month, 9% note for $42,000 in settlement of an account receivable due today. June 1 Collected in full the nine-month, 9\% note receivable from Party Plus, including interest. a Prepare journal entries (in general journal form) to record: (1) the receipt of the note on September 1; (2) the adjustment for interest on December 31 ; and (3) collection of principal and interest on June 1. Assume that the company does not use reversing entries. b Assume that instead of paying the note on June 1, the customer (Party Plus) had defaulted. Give the journal entry by Far Corners Imports to record the default. Assume that Party Plus has sufficient resources that the note eventually will be collected. Lon an-3 KilnKraft, Inc., owned by Abby Powers, had for the past five years been engaged in selling a line of ceramic merchandise to retail stores. Sales are made on credit and each month the company has estimated its uncollectible accounts expense as a percentage of net sales. The percentage used has been 21 of 1% of net sales, However, it appears that this provision has been inadequate because the Allowance for monthly provision. Powers has therefore $6,200 at May 31 prior to making the ing uncollectible accounts expense and to rely upon an analysis of the age and character of the accounts expense and to rely upon an analysis At May 31, the accounts receivable totaled $380,000. This total amount included past-due accounts in the amount of $86,000. None of these past-due accounts was considered hopeless; all accounts regarded as worthless had been written off as rapidly as they were determined to be uncollectible. After careful investigation of the past-due accounts at May 31, Abby Powers decided that the probable loss contained therein was 10%, and that in addition she should anticipate a loss of 1% of the current amounts receivable. TRUCTIONS a Compute the probable amount of uncollectible accounts included in the accounts receivable at May 31 , based on the analysis by the owner. b Prepare the journal entry necessary to carry out the change in company policy with respect to providing for uncollectible accounts expense