On January 1, 2019, Worthylake Company sold used machinery to Brown Company, accepting a $25,000, non-interest-bearing note maturing on January 1, 2021. Worthylake carried the machinery on its books at a cost of $21,000 and a current book value of $16,000. Neither the fair value of the machinery nor the note was determinable at the time of sale; however, Browns incremental borrowing rate was 10%.

Required:

Prepare the journal entries on Worthylakes books to record:

1.	sale of the machinery
2.	related adjusting entries on December 31, 2019, and 2020
3.	payment of the note by Brown on January 1, 2021

PAGET GENERAL JOURNAL DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT Jan. 1 Notes Receivable 25,000.00 Accumulated Depreciation 5,000.00 Gain on Sale of Machinery Discount on Notes Receivable Machinery 21,000.00 PAGE 2019 PAGE 2020 GENERAL JOURNAL DATE POST. REF. DEBIT CREDIT ACCOUNT TITLE Adjusting Entries PAGE 1 GENERAL JOURNAL DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT