Marydale Products permits its customers to defer payment by giving personal notes instead of cash. All the notes bear interest and require the customer to pay the entire note in a single payment six months after issuance. Consider the following transactions, which describe Marydale’s experience with two such notes:
a. On October 31, 2011, Marydale accepts a six-month, 9 percent note from customer A in lieu of a $3,600 cash payment for services provided that day.
b. On February 28, 2012, Marydale accepts a six-month, $2,400, 7 percent note from customer B in lieu of a $2,400 cash payment for services provided on that day.
c. On April 30, 2012, customer A pays the entire note plus interest in cash.
d. On August 31, 2012, customer B pays the entire note plus interest in cash.
Required:
Prepare the necessary journal and adjusting entries required to record transactions a through d in Marydale’s records.