Albany International Corporation, originally the Albany Felt Company, is an industrial-goods company based in Rochester, New Hampshire. On June 30, Year 1, Albany International sold merchandise to its good customer ABC Inc. and accepted a noninterest- bearing note in exchange. The note requires payment of $35,000 on March 31, Year 2. The fair value of the merchandise exchanged is $33,950. Albany International views the financing component of this contract as significant. Required: 1. Please prepare journal entries for Albany International to record the sale of merchandise (please omit any entry that might be required for the cost of the goods sold), any December 31, Year 1 interest accrual, and the March 31, Year 2 collection. 2. What is the effective interest rate on the note?

Albany International Corporation, originally the Albany Felt Company, is an industrial-goods company based in Rochester, New Hampshire. On June 30, Year 1, Albany International sold merchandise to its good customer ABC Inc. and accepted a noninterest- bearing note in exchange. The note requires payment of $35,000 on March 31, Year 2. The fair value of the merchandise exchanged is $33,950. Albany International views the financing component of this contract as significant. Required: 1. Please prepare journal entries for Albany International to record the sale of merchandise (please omit any entry that might be required for the cost of the goods sold), any December 31, Year 1 interest accrual, and the March 31, Year 2 collection. 2. What is the effective interest rate on the note?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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