Hemingway Company purchases equipment by issuing a 7-year, $280,000 non-interest-bearing note, when the market rate for this type of note is 8%. Hemingway will pay off the note with equal payments to be made at the end of each year.

CHART OF ACCOUNTS

Hemingway Company

General Ledger

	ASSETS
111	Cash
121	Accounts Receivable
141	Inventory
152	Prepaid Insurance
181	Equipment
198	Accumulated Depreciation

	LIABILITIES
211	Accounts Payable
221	Notes Payable
222	Discount on Notes Payable
231	Salaries Payable
250	Unearned Revenue
261	Income Taxes Payable

	EQUITY
311	Common Stock
331	Retained Earnings

	REVENUE
411	Sales Revenue

	EXPENSES
500	Cost of Goods Sold
511	Insurance Expense
512	Utilities Expense
521	Salaries Expense
532	Bad Debt Expense
540	Interest Expense
541	Depreciation Expense
559	Miscellaneous Expenses
910	Income Tax Expense

Prepare the journal entry to record Hemingways acquisition of the equipment on January 1.

General Journal Instructions

PAGE 10

GENERAL JOURNAL

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1
2
3