Question

Arctic Cat sold Seneca Motor Sports a shipment of snowmobiles. The snowmobiles were delivered on January 1, 2021, and Arctic received a note from Seneca indicating that Seneca will pay Arctic $38,300 on a future date. Unless informed otherwise, assume that Arctic views the time value of money component of this arrangement to be significant and that the relevant interest rate is 11%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

Required:

  1. Assume the note indicates that Seneca is to pay Arctic the $38,300 due on the note on December 31, 2021. Prepare the journal entry for Arctic to record the sale on January 1, 2021.

  2. Assume the same facts as in requirement 1, and prepare the journal entry for Arctic to record collection of the payment on December 31, 2021.

  3. Assume instead that Seneca is to pay Arctic the $38,300 due on the note on December 31, 2022. Prepare the journal entry for Arctic to record the sale on January 1, 2021.

  4. Assume instead that Arctic does not view the time value of money component of this arrangement to be significant, and that the note indicates that Seneca is to pay Arctic the $38,300 due on the note on December 31, 2021. Prepare the journal entry for Arctic to record the sale on January 1, 2021.

(If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your final answers to the nearest whole dollar amount.)

Answer is not complete. No Date General Journal Debit Credit 1 January 01, 2021 Notes receivable 38,300 Discount on notes rec

TABLE 2 Present Value of $1 PV = - (1+i) $1 ni 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 7.0% 8.0% 0.0% 0.0% 11

Please correct my mistake, and show me your work. P.S. the cash for the second question was not $3,795 either.

Thank you!

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Answer #1
No Date General Journal Debit Credit
2 Dec 31, 2021 Discount on notes receivables $         3,795
Cash ($38300 - $3795) $       34,505
Notes receivables $       38,300
Note: Put the amount in Debit column instead of credit column

> wrong answer

Anastassiya Zaitseva Wed, Nov 17, 2021 12:14 PM

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Answer #2

The mistake for #2 is that Cash should be debited $38,300, which is the same amount as notes receivables.

source: McGraw Hill
answered by: anonymous
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