Final answer:
In this scenario, Kleagle accepted a three-year, noninterest-bearing note in exchange for merchandise sold. This means that Kleagle sold merchandise to a customer and received a promissory note from the customer as payment.
Step-by-step explanation:
In this scenario, Kleagle accepted a three-year, noninterest-bearing note in exchange for merchandise sold. This means that Kleagle sold merchandise to a customer and received a promissory note from the customer as payment. The note is noninterest-bearing, which means that the customer does not need to pay any interest on the amount owed.
Typically, when a firm borrows money, they may either borrow from a bank or issue bonds. However, in this case, Kleagle did not borrow money but received a noninterest-bearing note as payment for the merchandise sold. This type of payment arrangement is common in business transactions, especially when there is a strong relationship with the customer.