71
Chapter 2
Accounting for Receivables
c) Comment on the accounts receivable ratios calculated from 2016 and 2017.
AP-17B (
7
)
On May 1, 2016, People’s Networks sold computer networking supplies to American Autos
for $36,000. The cost of the supplies is $15,000. Instead of paying immediately, American
Autos signed a note receivable with 11% annual interest, payable in eight months. People’s
Networks has a year-end of October 31.
Required
a) Record the journal entry when the sale is made; assume People’s Networks uses the
perpetual inventory system.
Date
Account Title and Explanation
Debit
Credit
b) Prepare the journal entry for the year-end adjustment.
Date
Account Title and Explanation
Debit
Credit
