Hughes Aircraft sold a four-passenger airplane for $980,000, receiving a a 12% note receivable. The journal entry to record this sale would include a: Multiple Choice Credit to cash. Credit to interest revenue. Debit to notes receivable. Credit to notes receivable.

The correct answer is Debit to Notes Receivable

Explanation:

The journal entry for selling the airplane worth $980,000 and in return receive the notes payable, so the entry is:

Notes Receivable A/c ... Dr $117,600

Sales A/c ... Cr $117,600

As the sales is made, so the sales account is credited and the sale is made against the notes receivable, and increase in assets is debited. So, the notes receivable is debited.

Working Note:

Amount = $980,000 * 12%

= $117,600