On December 31, 2020, Larkspur Co. performed environmental consulting services for Hayduke Co. Hayduke was short of cash, and Larkspur Co. agreed to accept a $ 252,100 zero-interest-bearing note due December 31, 2022, as payment in full. Hayduke is somewhat of a credit risk and typically borrows funds at a rate of 10%. Larkspur is much more creditworthy and has various lines of credit at 6%. Click here to view factor table. https://education.wiley.com/content/Kieso_Intermediate_Accounting_17e/media/simulations/interest_rate_tables.
On December 31, 2020, Larkspur Co. performed environmental consulting services for Hayduke Co. Hayduke was short of cash, and Larkspur Co. agreed to accept a $ 252,100 zero-interest-bearing note due December 31, 2022, as payment in full. Hayduke is somewhat of a credit risk and typically borrows funds at a rate of 10%. Larkspur is much more creditworthy and has various lines of credit at 6%. Click here to view factor table. https://education.wiley.com/content/Kieso_Intermediate_Accounting_17e/media/simulations/interest_rate_tables.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
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On December 31, 2020, Larkspur Co. performed environmental consulting services for Hayduke Co. Hayduke was short of cash, and Larkspur Co. agreed to accept a $ 252,100 zero-interest-bearing note due December 31, 2022, as payment in full. Hayduke is somewhat of a credit risk and typically borrows funds at a rate of 10%. Larkspur is much more creditworthy and has various lines of credit at 6%.
Click here to view factor table.
https://education.wiley.com/content/Kieso_Intermediate_Accounting_17e/media/simulations/interest_rate_tables.pdf
Transcribed Image Text:Assuming Larkspur Co's fiscal year-end is December 31, prepare the journal entry for December 31, 2021. (Round answers to 0
decimal places, e.g. 5,275. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles
are automatically indented when the amount is entered. Do not indent manually.)
Date
Account Titles and Explanation
Debit
Credit
Dec. 31,
Discount on Notes Receivable
2021
Interest Revenue
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