On March 1, 2018, Sun Devil Inc. sold goods to Bruins Company by accepting a 5-year, zero-interest-bearing note in the face amount of $1,062,939 with an imputed interest rate of 10%. Principal and interest are due at maturity. The goods have an inventory cost on Sun Devil's books of $400,000. a. Determine how much Sales Revenue Sun Devil should record on March 1, 2018. b. Using the information presented in #10 above, determine how much Interest Revenue will be recognized as of December 31, 2018.

On March 1, 2018, Sun Devil Inc. sold goods to Bruins Company by accepting a 5-year, zero-interest-bearing note in the face amount of $1,062,939 with an imputed interest rate of 10%. Principal and interest are due at maturity. The goods have an inventory cost on Sun Devil's books of $400,000. a. Determine how much Sales Revenue Sun Devil should record on March 1, 2018. b. Using the information presented in #10 above, determine how much Interest Revenue will be recognized as of December 31, 2018.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter9: Accounting For Receivables

Section: Chapter Questions

Problem 15EA: Resin Milling issued a $390,500 note on January 1, 2018 to a customer in exchange for merchandise....

See similar textbooks

Similar questions

Resin Milling issued a $390,500 note on January 1, 2018 to a customer in exchange for merchandise. The merchandise had a cost to Resin Milling of $170,000. The terms of the note are 24-month maturity date on December 31, 2019 at a 5% annual interest rate. The customer does not pay on its account and dishonors the note. Record the journal entries for Resin Milling for the following transactions. A. Initial sale on January 1, 2018 B. Dishonored note entry on January 1, 2020, assuming interest has not been recognized before note maturity
Spath Company borrows 75,000 by issuing a 4-year, noninterest-bearing note to a customer on January 1, 2019. In addition, Spath agrees to sell inventory to the customer at reduced prices over a 5-year period. Spaths incremental borrowing rate is 12%. The customer agrees to purchase an equal amount of inventory each year over the 5-year period so that a straight-line method of revenue recognition is appropriate. Required: Prepare the journal entries on Spaths books for 2019 and 2020. (Round answers to 2 decimal places.)
Starlight Enterprises has net credit sales for 2019 in the amount of $2,600,325, beginning accounts receivable balance of $844,260, and an ending accounts receivable balance of $604,930. Compute the accounts receivable turnover ratio and the number of days sales in receivables ratio for 2019 (round answers to two decimal places). What do the outcomes tell a potential investor about Starlight Enterprises if the industry average is 1.5 times and the number of days sales ratio is 175 days?
Rain T-Shirts issued a $440,600 note on January 1, 2018 to a customer, Larry Potts, in exchange for merchandise. The merchandise had a cost to Rain T-Shirts of $220,300. The terms of the note are 24-month maturity date on December 31, 2019 at a 4.5% annual interest rate. Larry Potts does not pay on his account and dishonors the note. Record journal entries for Rain T-Shirts for the following transactions. A. Initial sale on January 1, 2018 B. Dishonored note entry on January 1, 2020, assuming interest has not been recognized before note maturity
On June 30, 2024, the Esquire Company sold some merchandise to a customer for $68,000. In payment, Esquire agreed to accept a 9% note requiring the payment of interest and principal on March 31, 2025. The 9% rate is appropriate in this situation. Required: Prepare journal entries to record the sale of merchandise (omit any entry that might be required for the cost of the goods sold), the December 31, 2024 interest accrual, and the March 31, 2025 collection. If the December 31 adjusting entry for the interest accrual is not prepared, by how much will income before income taxes be over- or understated in 2024 and 2025?
On June 30, 2024, the Esquire Company sold some merchandise to a customer for $56,000. In payment, Esquire agreed to accept a 8% note requiring the payment of interest and principal on March 31, 2025. The 8% rate is appropriate in this situation. Required: Prepare journal entries to record the sale of merchandise (omit any entry that might be required for the cost of the goods sold), the December 31, 2024 interest accrual, and the March 31, 2025 collection. If the December 31 adjusting entry for the interest accrual is not prepared, by how much will income before income taxes be over- or understated in 2024 and 2025? Prepare journal entries to record the sale of merchandise (omit any entry that might be required for the cost of the goods sold), the December 31, 2024 interest accrual, and the March 31, 2025 collection.Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. June…
On January 1, 2018, The Barrett Company purchased merchandise from a supplier. Payment was a noninterestbearing note requiring five annual payments of $20,000 on each December 31 beginning on December 31, 2018,and a lump-sum payment of $100,000 on December 31, 2022. A 10% interest rate properly reflects the timevalue of money in this situation.Required:Calculate the amount at which Barrett should record the note payable and corresponding merchandise purchasedon January 1, 2018.
The Field Detergent Company sold merchandise to the Abel Company on June 30, 2021. Payment was made in the form of a noninterest-bearing note requiring Abel to pay $85,000 on June 30, 2023. Assume that a 10% interestrate properly reflects the time value of money in this situation.Required:Calculate the amount at which Field should record the note receivable and corresponding sales revenue on June 30, 2021.
Resin Milling issued a $420,000 note on January 1, 2018 to a customer in exchange for merchandise. The merchandise had a cost to Resin Milling of $181,000. The terms of the note are 24-month maturity date on December 31, 2019 at a 7% annual interest rate. The customer does not pay on its account and dishonors the note. Record the journal entries for Resin Milling for the following transactions. A. Initial sale on January 1, 2018 B. Dishonored note entry on January 1, 2020, assuming interest has not been recognized before note maturity If an amount box does not require an entry, leave it blank. Jan. 1, 2018 Notes Receivable Notes Receivable Sales Revenue Sales Revenue To record sale in exchange for notes receivable,24-month maturity, 7% interest rate Jan. 1, 2018 Cost of Goods Sold Cost of Goods Sold Merchandise Inventory Merchandise Inventory To record the cost of sale Jan. 1, 2020 - Select - - Select - - Select - - Select…
Zing Cell Phone Company entered into the following transactions involving current liabilities during 2020 and 2021. 2020 Mar. 14 Purchased merchandise on credit from Ferris Inc. for $160,000. The termswere 1/10, n/30 (assume a perpetual inventory system). Apr. 14 Zing paid $35,000 cash and replaced the $125,000 remaining balance of the accountpayable to Ferris Inc. with a 6%, 60-day note payable. May 21 Borrowed $135,000 from Scotiabank by signing a 5.5%, 90-day note. ? Paid the note to Ferris Inc. at maturity. ? Paid the note to Scotiabank at maturity. Dec. 15 Borrowed $110,000 and signed a 6.25%, 120-day note with National Bank. Dec. 31 Recorded an adjusting entry for the accrual of interest on the note to National Bank. 2021 ? Paid the note to National Bank at maturity. Required:1. Determine the maturity dates of the three notes just described. 2. Present journal entries for each of the preceding dates. (Use 365 days an year. Do not round…
Zing Cell Phone Company entered into the following transactions involving current liabilities during 2020 and 2021. 2020 Mar. 14 Purchased merchandise on credit from Ferris Inc. for $152,000. The termswere 1/10, n/30 (assume a perpetual inventory system). Apr. 14 Zing paid $31,000 cash and replaced the $121,000 remaining balance of the accountpayable to Ferris Inc. with a 4%, 60-day note payable. May 21 Borrowed $131,000 from Scotiabank by signing a 3.5%, 90-day note. ? Paid the note to Ferris Inc. at maturity. ? Paid the note to Scotiabank at maturity. Dec. 15 Borrowed $106,000 and signed a 4.25%, 120-day note with National Bank. Dec. 31 Recorded an adjusting entry for the accrual of interest on the note to National Bank. 2021 ? Paid the note to National Bank at maturity. Required:1. Determine the maturity dates of the three notes just described. HINT: Maturity Date of Ferris Inc, Scotiabank, National bank respectively. Present journal entries…
Zing Cell Phone Company entered into the following transactions involving current liabilities during 2020 and 2021. 2020 Mar. 14 Purchased merchandise on credit from Ferris Inc. for $136,000. The termswere 1/10, n/30 (assume a perpetual inventory system). Apr. 14 Zing paid $23,000 cash and replaced the $113,000 remaining balance of the accountpayable to Ferris Inc. with a 3%, 60-day note payable. May 21 Borrowed $123,000 from Scotiabank by signing a 2.5%, 90-day note. ? Paid the note to Ferris Inc. at maturity. ? Paid the note to Scotiabank at maturity. Dec. 15 Borrowed $98,000 and signed a 3.25%, 120-day note with National Bank. Dec. 31 Recorded an adjusting entry for the accrual of interest on the note to National Bank. 2021 ? Paid the note to National Bank at maturity. Required:1. Determine the maturity dates of the three notes just described.2. Present journal entries for each of the preceding dates. (Use 365 days an year. Do not round…