Southern supply 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:

Nov. 1Received from a customer (LCC) a nine-month, 12 percent note for 60,000 in settlement of an account receivable due today.

Aug. 1Collected in full the nine month, 12 percent note receivable from LCC, including interest.

Required:

a. Prepare journal entries to record (1) the receipt of note (2) interest on note (3) the collection of note and interest thereon.

b. Instead of collection on due date, the customer LCC defaulted, pass the journal entry to record that transaction.