On December 31, 2018, Kohl Company performed engineering consulting services for Hemingway, Inc. Hemingway was short of cash, and Kohl Co. agreed to accept a $200,000 zero-interest-bearing note due December 31, 2020, as payment in full. Hemingway is somewhat of a credit risk and typically borrows funds at a rate of 10%. Kohl is much more creditworthy and has various lines of credit at 6%.

Prepare the following journal entries for Kohl Co:

(a) Prepare the journal entry to record the transaction of December 31, 2018

(b) Prepare the adjusting journal entry for December 31, 2019

(c) Prepare the adjusting journal entry and the collection of the note for December 31, 2020

Answer rating: 100% (QA)

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