On June 1, 2014, Novack Company purchases equipment on account from Moleski Manufacturers for $50,000. Novack is unable to pay its account on July 1, 2014, so Moleski agrees to accept a three-month, 7% note payable from Novack. Interest is payable the first of each month, starting August 1, 2014. Novack has an August 31 fiscal year end. Moleski has a December 31 fiscal year end. Both companies adjust their accounts on an annual basis. Novack honours the note at maturity.
Instructions
(a) Record all transactions related to the note for Novack Company.
(b) Record all transactions related to the note for Moleski Manufacturers. Assume the cost of the equipment to Moleski was $30,000.