Problem:
Hemingway Company had the following transactions for the year ended December 31,2006.
July 1 Received a $2,000, three-month 10% promissory note from Damon Runyon in settlement of an open account.
Aug. 1 Received a $1,000, three-month 12% note receivable from Carl Sandburg for cash borrowed by Sandburg.
Oct. 1 Received notice that the Damon Runyon note had been dishonored. It is expected that Runyon will eventually pay the amount owed.
Nov. 1 Sandburg honored the note receivable in full. (Assume that interest has not been accrued.)
Instructions: Prepare the entries for the transactions above.