May 1 Sold merchandise on account to L. Carney, $5,600.

20 L. Carney gave a $5,600, 90-day, 12% note to extend time for payment.

30 L. Carney’s note is discounted at Commercial Bank at a discount rate of 15%.

June 20 Received a $2,400, 60-day, 10% note from P. Arnst in payment for sale of merchandise.

July 5 P. Arnst’s note is discounted at Commercial Bank at a discount rate of 12%.

Aug. 19 P. Arnst’s note is dishonored. The bank bills Madison Graphics for the maturity value of the note plus a $30 bank fee.

31 P. Arnst’s dishonored note is collected; Arnst pays Madison the maturity value of the note, the $30 bank fee, and interest at 10% on the maturity value plus the bank fee.

Sept. 1 Sold merchandise on account to B. Faust, $6,400.

12 B. Faust paid $400 and gave a $6,000, 30-day, 12% note to extend time for payment.

Oct. 12 B. Faust paid $400, plus interest, and gave a new $5,600, 60-day, 14% note to extend time for payment.

26 B. Faust’s note is discounted at Commercial Bank at a discount rate of 14%.

Dec. 11 B. Faust’s note is dishonored. The bank bills Madison Graphics for the maturity value of the note plus a $30 bank fee.

Dec. 27 B. Faust’s dishonored note is collected. Faust pays Madison Graphics the maturity value of the note, the $30 bank fee, and interest at 14% on the maturity value plus the bank fee.

REQUIRED

Record the transactions in a general journal.

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