For the Following Transaction, Provide All of the Required Journal

question 38

Essay

For the following transaction, provide all of the required journal entries from inception to liquidation. Assume a December 31 year-end and that the company does not prepare interim statements. Round all amounts to nearest dollar. $\begin{array}{lr}\text { Face value of note payable } & \$ 200,000 \\\text { Date of issue for note } & \text { May } 1,2019 \\\text { Due date for note } & \text { May } 1,2020 \\\text { Interest rate in the note } & 5 \% \\& \text { (interest due at maturity) } \\\text { Market rate of interest } & 5 \% \\\text { Consideration received } & \text { Cash }\end{array}$

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Definitions:

Direct Write Off Method

An accounting practice where uncollectable accounts receivable are directly removed from the books when deemed uncollectible.

Direct Write-off Method

An accounting practice where uncollectible accounts receivable are directly written off against income at the time they are deemed unrecoverable.

General Journal

The general journal is an accounting ledger in which all types of transactions are initially recorded before they are posted to specific accounts in the general ledger.

Direct Write Off Method

An accounting method where uncollectible accounts receivable are written off directly against income at the time they are deemed uncollectible.