Tanning Corp. was experiencing cash flow problems and was unable to pay its $123,600 account payable to Sun Corp. when it fell due on September 30, 2017.

Sun Corp. agreed to substitute a one-year note for the open account. The following two options were presented to Tanning Corp by Sun Corp.:

Option 1: A one-year note for $123,600 due September 30, 2018. Interest at a rate of 9% would be payable at maturity.

Option 2: A one-year noninterest-bearing note for $134,724. The implied rate of interest is 9%. Assume that Sun Corp. has a December 31 year end.

A) Assuming Tanning Corp. chooses Option 1, prepare the entries required on Sun Corp.s books on September 30, 2017, December 31, 2017, and September 30, 2018. (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.)

No. Account Titles and Explanation______Debit________-Credit

Need two entries - Date _______________

________________

Need two entries -Date ________________

________________

Need 4 entries Date ________________

_________________

_________________

________________

B) Assuming Tanning Corp. chooses Option 2, prepare the entries required on Sun Corp.s books on September 30, 2017, December 31, 2017, and September 30, 2018. (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.) (8 entries total)

No. Account Titles and Explanation______Debit________-Credit

Need two entries Date ______________________

______________________

Need two entries Date ______________________

_______________________

Need two entries Date ______________________

_____________________

To record Interest

Need two entries Date __________________

___________________

To record Notes