Sheffield Corp was experiencing cash flow problems and was unable to pay its $118,000 account payable to Flounder Corp when it fell due on September 30, 2020 Flounder agreed to substitute a one year note for the open account The following two options were presented to Sheffield by Flounder Corp Option 1 A one year note for $118,000 due September 30, 2021 Interest at a rate of 10 would be payable at maturity Option 2 A one year noninterest bearing note for $129,800 The implied rate of interest is 10 Assume that Flounder Corp has a December 31 year end Assuming Sheffield Corp chooses Option 1, prepare the entries required on Flounder Corp s books on September 30, 2020, December 31, 2020, and September 30, 2021 (Credit account titles are automatically indented when the amount is entered Do not indent manually If no entry is required, select No Entry for the account titles and enter 0 for the amounts Round answers to 0 decimal places, e g 5,275 Record journal entries in the order presented in the problem ) Date Account Titles and Explanation Debit Credit September 30, 2020December 31, 2020September 30, 2021 September 30, 2020December 31, 2020September 30, 2021 September 30, 2020December 31, 2020September 30, 2021 SHOW LIST OF ACCOUNTS Assuming Sheffield Corp chooses Option 2, prepare the entries required on Flounder Corp s books on September 30, 2020, December 31, 2020, and September 30, 2021 (Credit account titles are automatically indented when the amount is entered Do not indent manually If no entry is required, select No Entry for the account titles and enter 0 for the amounts Round answers to 0 decimal places, e g 5,275 Record journal entries in the order presented in the problem ) Date Account Titles and Explanation Debit Credit September 30, 2020December 31, 2020September 30, 2021 September 30, 2020December 31, 2020September 30, 2021 September 30, 2020December 31, 2020September 30, 2021 (To record interest income) September 30, 2020December 31, 2020September 30, 2021

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Question: Sheffield Corp. was experiencing cash flow problems and was unable to pay its $118,000 account payable to Flounder Corp. when it fell due on September

Sheffield Corp. was experiencing cash flow problems and was unable to pay its $118,000 account payable to Flounder Corp. when it fell due on September 30, 2020. Flounder agreed to substitute a one-year note for the open account. The following two options were presented to Sheffield by Flounder Corp.:

Option 1:		A one-year note for $118,000 due September 30, 2021. Interest at a rate of 10% would be payable at maturity.
Option 2:		A one-year noninterest-bearing note for $129,800. The implied rate of interest is 10%.

Assume that Flounder Corp. has a December 31 year end.

Assuming Sheffield Corp. chooses Option 1, prepare the entries required on Flounder Corp.s books on September 30, 2020, December 31, 2020, and September 30, 2021. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275. Record journal entries in the order presented in the problem.)

Date	Account Titles and Explanation	Debit	Credit
September 30, 2020December 31, 2020September 30, 2021

September 30, 2020December 31, 2020September 30, 2021

September 30, 2020December 31, 2020September 30, 2021

SHOW LIST OF ACCOUNTS

Assuming Sheffield Corp. chooses Option 2, prepare the entries required on Flounder Corp.s books on September 30, 2020, December 31, 2020, and September 30, 2021. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275. Record journal entries in the order presented in the problem.)

Date	Account Titles and Explanation	Debit	Credit
September 30, 2020December 31, 2020September 30, 2021

September 30, 2020December 31, 2020September 30, 2021

September 30, 2020December 31, 2020September 30, 2021

	(To record interest income)
September 30, 2020December 31, 2020September 30, 2021

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