On May 2, McLain Company lends $88,000 to Chang, Inc., issuing a 6-month, 6% note. At the maturity date, November 2, Chang indicates that it cannot pay.

(a)

Prepare the entry to record the issuance of the note. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date Account Titles and Explanation Debit Credit

(b)

Prepare the entry to record the dishonor of the note, assuming that McLain Company expects collection will occur. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date Account Titles and Explanation Debit Credit

(c)

Prepare the entry to record the dishonor of the note, assuming that McLain Company does not expect collection in the future and uses the allowance method. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date Account Titles and Explanation Debit Credit