Question: Please help with the problem below. Please note that this problem has 3 parts (a,b and c). Please show all work for answers. Exercise 2

Please help with the problem below. Please note that this problem has 3 parts (a,b and c). Please show all work for answers.

Exercise 2 On December 31, 2020, Mare Company performed engineering consulting services for Palmquist, Inc. Palmquist was short of cash, and Mare Co. agreed to accept a $230,000 zero-interest-bearing note due December 31, 2021, as payment in full. Palmquist is somewhat of a credit risk and typically borrows funds at a rate of 8%. Mare is much more creditworthy and has various lines of credit at 5%.

Instructions: Prepare the following journal entries for Mare Co. You must show supporting computations to receive full credit.

a. Prepare the journal entry to record the transaction of December 31, 2020.

b. Prepare the adjusting journal entry for December 31, 2021.

c. Prepare the adjusting journal entry and the collection of the note for December 31, 2022

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