Wull Associates sold a piece of equipment to Coral Company on April 1,2016,for $800,000.Wull agreed to accept a 9-month note with 8% interest (current market rate)due on its maturity date,December 31,2016.Wull's journal entry to record the receipt of the note on April 1,2016,will include a ________.

Question

Quizplus · Accepted Answer

Wull Associates should record the receipt of the note by debiting Note Receivable for $800,000. This is because the note received from Coral Company is an asset for Wull Associates, and an increase in assets is recorded by a debit entry. Wull Associates has not received cash yet, so there should be no entry to cash. The credit entry to record the sale was made at the time of the sale, not when the note was received.

Wull Associates Sold a Piece of Equipment to Coral Company