58
Chapter 2
Accounting for Receivables
c) Summit Company honoured the note. Record the entry upon payment.
Date
Account Title and Explanation
Debit
Credit
AP-20A (
7
)
On January 1, 2016, Ashley Manufacturing sold equipment to Henry Company for $200,000
with a cost of $140,000. Henry Company signed a nine-month note for the purchase. The note
is due on September 30, 2016 with an annual interest rate of 9%. Ashley Manufacturing has an
April 30 year-end and uses a perpetual inventory system. On September 30, Henry Company
dishonored the note due to insolvency. Ashley believes that Henry will eventually pay when
things get better.
Required
Prepare the following journal entries for Ashley Manufacturing.
a) Prepare journal to record the sale of the equipment.
Date
Account Title and Explanation
Debit
Credit
