Napier Plumbing Supply entered into the following transactions involving short-term notes receivable during 1996. Jan. 29 Sold merchandise with a sales value of $80,000 in exchange for a threemonth note with a stated annual rate of 8 percent. Mar. 1 Loaned $14,000 to one of the company employees. The note called for a 10 percent annual interest rate and was to be paid in full at the end of the year. Apr. 29 Note issued on Jan. 29 is repaid. May 31 Accepted a five-month note with a stated annual rate of 9 percent in payment of a $25,000 open account receivable. July 14 Sold merchandise for $45,000. Five thousand dollars was collected in cash, and the remainder was accepted in the form of a six-month note with a stated annual rate of 12 percent. Oct. 31 Note issued on May 31 is repaid. Dec. 1 Sold merchandise for $30,000 in exchange for a 45-day note with a stated annual rate of 8 percent. REQUIRED:

a. Assuming that the notes are recorded at face value and no discount is recognized, prepare journal entries that would cover the following: 1. The issuance of the notes 2. The principal and interest payments 3. The adjusting entries on December 31

b. Assume that the notes are recorded at face value plus interest and a discount is recognized. Prepare journal entries to cover the same items as in (a).