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On November 1, 2023, Luna Corp. and Solar Ltd. reached an agreement to convert Solar's outstanding account receivable of $32,000 into a 3-month, 7% note

On November 1, 2023, Luna Corp. and Solar Ltd. reached an agreement to convert Solar's outstanding account receivable of $32,000 into a 3-month, 7% note receivable.

On February 1, 2024, Solar dishonoured the note receivable.

Required:

Prepare required journal entries for Luna Corp. for the above transactions, assuming a December 31 year end and assuming adjusting journal entries are recorded at the end of its fiscal year.

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