Question

On December 31, 2017, Green Company rendered services to End Corporation at an agreed price of $91,844.10, accepting $36,000 down and agreeing installments of $18,000 promissory note rece ivable each December 31. Under the circums tances , the note is considered to have an appropriate imputed rate of interest of 118. accept the balance in a four equal to Instructions (a) Determine the present value of the note. (b) Prepare the journal entry to for December 31, '2017.

Answer 1

B2 X for (a) A B * annual installment present value annuity factor (11%, 4 periods) present value of the note $ 18,000 3.10245 $ 55,844.10 (b) date account titles and explanation debit credit $36,000.00 $ 55,844.10 31 December 2017 Cash Note Receivable Service Revenue (Service Revenue recorded) $ 91,844.10

for formulas and calculations, refer to the image below -

B2 A B C annual installment 18000 present value annuity factor (11%, 4 periods) =ROUND(-PV(11%,4,1),5) present value of the note =E2*E3 (b) date account titles and explanation debit credit 36000 =E4 43100 Cash Note Receivable Service Revenue (Service Revenue recorded) =E8+E9

In case you have any query, kindly ask in comments.