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Chapter 2
Accounting for Receivables
AP-20B (
7
)
On September 1, 2016, The Highlander Truck Company sold two heavy duty trucks to Zebra
Corporation for $160,000. Highlander’s cost for the trucks was $135,000. Zebra Corporation
signed a seven- month note for the purchase. The note is due on April 1, 2017 with an annual
interest rate of 6%. The Highlander Truck Company has a December 31 year-end and uses
a perpetual inventory system. On April 1, 2017, Zebra dishonoured the note because the
company was going through a tough period and could not afford to pay the balanced owed.
The Highlander Truck Company believes that Zebra Corporation will eventually make the
payment when the economy improves.
Required
a) Prepare the journal entry to record the sale.
Date
Account Title and Explanation
Debit
Credit
