On May 2, McLain Company lends $57,800 to Chang, Inc., issuing a 6-month,

On May 2, McLain Company lends $57,800 to Chang, Inc., issuing a 6-month, 10% note. At the maturity date, November 2, Chang indicates that it cannot pay.

Prepare the entry to record the issuance of the note.

Prepare the entry to record the dishonor of the note, assuming that McLain Company expects collection will occur.

Prepare the entry to record the dishonor of the note, assuming that McLain Company does not expect collection in the future.

Prepare the entry to record the issuance of the note.

Notes Receivable debit 57800
Cash Credit 57800

Prepare the entry to record the dishonor of the note, assuming that McLain Company expects collection will occur.

Accounts Receivable Debit 60690
Interest Revenue Credit ($57,800 × 10% × 1/2) = $2,890
Notes Receivable Credit 57800

Prepare the entry to record the dishonor of the note, assuming that McLain Company does not expect collection in the future.

Allowance for Doubtful Accounts Debit 57800
Notes Receivable Credit 57800