Lee Company accepts a $27,000, four-month, 6% note receivable in settlement of an account receivable on June 1, 2017. Interest is to be paid at maturity. Lee Company has a December 31 year end and adjusts its accounts annually.
(a) Record (1) the issue of the note on June 1 and (2) the settlement of the note on October1, assuming the note is honoured.
(b) Assume instead that the note is dishonoured but eventual collection is expected. Record the October 1 journal entry.
(c) Assume instead that the note is dishonoured and eventual collection is not expected. Record the October 1 journal entry.