Doid Acrobats lent $16,529 to Donaldson, Inc., accepting Donaldson's 2-year, $20,000, zero interest bearing note. The implied interest rate is 10%Prepare Dold's journal entries for the initial transaction.Notes Receivable20.000Cash20,000

Answered: Dold Acrobats lent $16,529 to…

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

Chapter6: Cash And Receivables

Section: Chapter Questions

Problem 14RE: On June 1, Phillips Corporation sold, with recourse, a note receivable from a customer to a bank....

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Doid Acrobats lent $16,529 to Donaldson, Inc., accepting Donaldson's 2-year, $20,000, zero interest bearing note. The implied interest rate is 10%
Prepare Dold's journal entries for the initial transaction.
Notes Receivable
20.000
Cash
20,000

Expert Solution

Step 1

Notes Receivables: The notes receivable is an account on the balance sheet usually under the current assets section if its life is less than a year. Specifically, a note receivable is a written promise to receive money at a future date. The money is usually made up of interest and principal.

Zero interest-bearing note: A non-interest-bearing note is a note or bond with no stated interest rate on its face. Contrary to the name, noninterest-bearing notes do actually pay interest. The interest is implied in the face value of the note.

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