(b) On January 1, 2020, Pearl Furniture borrowed $5,900,000 (face value) from Sinise Co, a major customer, through a zero-interest- bearing note due in 4 years. Because the note was zero-interest-bearing, Pearl Furniture agreed to sell furniture to this customer at lower than market price. A 10% rate of interest is normally charged on this type of loan. Prepare the journal entry to record this transaction, (Round answers to O decimal places, eg. 38,548. If no entry is required, select "No Entry for the account titles and enter O for the amounts. Credit occount tities are automatically indented when amount is entered. Do not Indent manually.)
(b) On January 1, 2020, Pearl Furniture borrowed $5,900,000 (face value) from Sinise Co, a major customer, through a zero-interest- bearing note due in 4 years. Because the note was zero-interest-bearing, Pearl Furniture agreed to sell furniture to this customer at lower than market price. A 10% rate of interest is normally charged on this type of loan. Prepare the journal entry to record this transaction, (Round answers to O decimal places, eg. 38,548. If no entry is required, select "No Entry for the account titles and enter O for the amounts. Credit occount tities are automatically indented when amount is entered. Do not Indent manually.)
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable
Section: Chapter Questions
Problem 24E: Spath Company borrows 75,000 by issuing a 4-year, noninterest-bearing note to a customer on January...
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Question
Ee 67.
![(b) On January 1, 2020, Pearl Furniture borrowed $5,900,000 (face value) from Sinise Co, a major customer, through a zero-interest-
bearing note due in 4 years. Because the note was zero-interest-bearing, Pearl Furniture agreed to sell furniture to this customer at
lower than market price. A 10% rate of interest is normally charged on this type of loan.
Prepare the journal entry to record this transaction. (Round answers to O decimal places, e.g. 38,548. If no entry is required, select "No
Entry" for the account titles and enter O for the amounts. Credit occount titles are automatically indented when amount is entered. Do not
Indent manually)
Account Titles and Explanation
Cash
Discount on Notes Payable
Notes Payable
Unearned Sales Revenue
Interest expense to be reported for 2020
Debit
Determine the amount of interest expense to report for 2020. (Round answer to 0 decin
S
5900000
402975
Credit
5900000
ploces, eg 38.548)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fdc7cff3e-a268-4c14-86f9-cc93324d32f9%2F440182bb-0166-424e-912b-9f7982487327%2Fyr7b78_processed.png&w=3840&q=75)
Transcribed Image Text:(b) On January 1, 2020, Pearl Furniture borrowed $5,900,000 (face value) from Sinise Co, a major customer, through a zero-interest-
bearing note due in 4 years. Because the note was zero-interest-bearing, Pearl Furniture agreed to sell furniture to this customer at
lower than market price. A 10% rate of interest is normally charged on this type of loan.
Prepare the journal entry to record this transaction. (Round answers to O decimal places, e.g. 38,548. If no entry is required, select "No
Entry" for the account titles and enter O for the amounts. Credit occount titles are automatically indented when amount is entered. Do not
Indent manually)
Account Titles and Explanation
Cash
Discount on Notes Payable
Notes Payable
Unearned Sales Revenue
Interest expense to be reported for 2020
Debit
Determine the amount of interest expense to report for 2020. (Round answer to 0 decin
S
5900000
402975
Credit
5900000
ploces, eg 38.548)
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