Stricker Company Accepted a $10,000,8%,90-Day Note Dated May 16,from Johnson

question 127

Essay

Stricker Company accepted a $10,000,8%,90-day note dated May 16,from Johnson Corp.as an extension on its past-due account.Prepare the necessary general journal entries in Stricker Company's books on May 16 and August 14 (maturity date),for each of the following independent assumptions:
(a)Note was held until maturity and collected on time.
(b)Note was dishonoured.Amount of note and interest were written off as uncollectible.(Stricker uses the allowance method of accounting for bad debts.)

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Definitions:

Material Alteration

A significant change that modifies the nature or terms of a document or agreement, potentially affecting its legal obligations or rights.

Figures

Numerical data or statistics, often used for analysis or to illustrate a point.

Check

A written, dated, and signed instrument that directs a bank to pay a specific sum of money to the bearer or a specified person.

FTC Rule 433

Also known as the "Holder in Due Course" rule, which protects consumers entering into credit contracts by preserving their claims and defenses against the seller.