Question

Hughes Aircraft sold a 4-passenger airplane for $380,000, receiving a $50,000 down payment and a 12% note for the balance. The journal entry to record this sale would include a:

A) Debit to Accounts Receivable
B) Debit to Cash
C) Debit to Notes Receivable
D) Debit to Sales Revenue

Answer 1

The journal entry for the sale of an airplane with partial down payment and balance on a note would include debits to Cash and Notes Receivable, and a credit to Sales Revenue.

Step-by-step explanation:

When Hughes Aircraft sold a 4-passenger airplane for $380,000 with a $50,000 down payment and a 12% note for the balance, the correct journal entry to record this sale would include a Debit to Cash for the $50,000 down payment, a Debit to Notes Receivable for the balance of the sale ($330,000), and a Credit to Sales Revenue for the total amount of the sale ($380,000).

The complete journal entry would be:
Debit Cash $50,000
Debit Notes Receivable $330,000
Credit Sales Revenue $380,000

This entry reflects the initial cash received, the promise to pay the remaining balance, and the revenue recognized from the sale of the airplane.