Lee Company accepts a $27,000, four-month, 6% note receivable in settlement of an account receivable on June 1, 2021. Interest is to be paid at maturity. Lee Company has a December year end and adjusts its accounts annually. (Note: Lee Company uses only one allowance account for both accounts and notes receivable.)

a. Record (1) the issue of the note on June 1 and (2) the settlement of the note on October 1, 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.