Value of non interest bearing note = $19,200
Sales revenue to be recognized = $19,200*PVF(6%, 3 yrs)
= $19,200*0.83962 = $16,121
The required journal entries for the give transactions are shown as follows:-
Journal Entries (Amounts in $)
Date | Account Name | Debit | Credit |
April 1, 2020 | Notes Receivable | 19,200 | |
Discount on Notes Receivable (19,200-16,121) | 3,079 | ||
Sales Revenue | 16,121 | ||
Mar. 31, 2021 | Discount on Notes Receivable (16,121*6%) | 967 | |
Interest Revenue | 967 | ||
Mar. 31, 2022 | Discount on Notes Receivable [(16,121+967)*6%] | 1,025 | |
Interest Revenue | 1,025 | ||
Mar. 31, 2023 | Discount on Notes Receivable [19,200-(16,121+967+1025)] | 1,087 | |
Interest Revenue | 1,087 | ||
(To record the interest income) | |||
Mar. 31, 2023 | Cash | 19,200 | |
Notes Receivable | 19,200 | ||
(To record settlement of note) |
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