On December 31, 2020, Ashcake Marketing performed advertising services for Henry Company. Henry was short on cash, and Ashcake agreed to accept a $200,000 zero-interest-bearing note due December 31, 2022, as payment in full. Henry is somewhat of a credit risk and typically borrows funds at a rate of 11%. Ashcake is much more creditworthy and has various lines of credit at 6%.

Both Ashcake and Henry have a fiscal year-end of December 31.

Prepare the journal entries Ashcake would record on each of the following dates. Be sure to designate your debits with DR and your credits with CR.

a. December 31, 2020

b. December 31, 2021

c. December 31, 2022