On April 2, 2016, Wang Company received a 6-month, 8 percent interest-bearing note from Paula Jackson in settlement of a past-due account receivable of $12,000. On May 3, Wang discounted this note at Mercantile State Bank. The bank charged a discount rate of 10 percent. On October 2, Wang received word that the note and interest had been paid in full.

1. Give all entries, in general journal form, to record these events.

2. Assume that Jackson had failed to pay the note and that the bank charged Wang's account with the note and a $50 protest fee. Give the journal entry(ies) necessary to record these facts.

Analyze:

What amount of interest income or interest expense will Wang report in 2016 as a result of these transactions assuming Jackson paid the note when due?