Reference no: EM132852782

Problem -  Accounts and Notes Receivable - Tuscon Inc. sold merchandise for $6,000 to P. Paxton on July 31, 2016, with payment due in 30 days. Subsequent to this, Paxton experienced cash-flow problems and was unable to pay its debt. On December 24, 2016, Tuscon stopped trying to collect the outstanding receivable from Paxton and wrote off the account as uncollectible. On January 15, 2017, Paxton sent Tuscon a check for $1,500 and offered to sign a two-month, 8%, $4,500 promissory note to satisfy the remaining obligation. Paxton paid the entire amount due Tuscon, with interest, on March 15, 2017. Tuscon ends its accounting year on December 31 each year.

Required -

1. Prepare all of the necessary journal entries on the books of Tuscon Inc. from July 31, 2016, to March 15, 2017.

2. Why would Paxton bother to send Tuscon a check for $1,500 on January 15 and agree to sign a note for the balance, given that such a long period of time had passed since the original purchase?