Harsimran Inc. owed Lacey Co. $12,000.They could not pay on time.They negotiated the following settlement with Lacey Co.They will pay $2,000 right away and take out a note for the balance.The note is dated December 11, 2020, is for 60 days, and includes 9% interest.The principal of the note and interest will be paid at maturity.

Required

Prepare the journal entry for Harsimran Inc. to:

1.Record the exchange of the accounts payable for the note payable and cash

2.Record the interest accrual on Dec 31, 2020.

3.Record the payment of the note.