BBY Company loaned $66,116 to Orwell, Inc, accepting Orwell's 2-year, $80,000, zero-interest-bearing note. The implied interest rate is 10%. Prepare BBY's journal entries for the initial transaction, recognition of interest each year, and the collection of $80,000 at maturity. Debit - Notes Receivable $80,000 Credit - Credit - Cash Debit - Credit - Debit - Credit - Interest Revenue
BBY Company loaned $66,116 to Orwell, Inc, accepting Orwell's 2-year, $80,000, zero-interest-bearing note. The implied interest rate is 10%. Prepare BBY's journal entries for the initial transaction, recognition of interest each year, and the collection of $80,000 at maturity. Debit - Notes Receivable $80,000 Credit - Credit - Cash Debit - Credit - Debit - Credit - Interest Revenue
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
![BBY Company loaned $66,116 to Orwell, Inc, accepting Orwell's
2-year, $80,000, zero-interest-bearing note. The implied interest
rate is 10%. Prepare BBY's journal entries for the initial
transaction, recognition of interest each year, and the collection of
$80,000 at maturity.
Debit - Notes Receivable $80,000
Credit -
Credit - Cash
Debit -
Credit -
Debit -
Credit - Interest Revenue
6.026
DEC
16
618
10](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F93e9e2bf-8eb8-47fc-882b-eb3d958ece08%2Fa3ec136a-0757-4644-ac40-d64f6c49b56d%2Fiii2kvc_processed.jpeg&w=3840&q=75)
Transcribed Image Text:BBY Company loaned $66,116 to Orwell, Inc, accepting Orwell's
2-year, $80,000, zero-interest-bearing note. The implied interest
rate is 10%. Prepare BBY's journal entries for the initial
transaction, recognition of interest each year, and the collection of
$80,000 at maturity.
Debit - Notes Receivable $80,000
Credit -
Credit - Cash
Debit -
Credit -
Debit -
Credit - Interest Revenue
6.026
DEC
16
618
10
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