Question

Respond to the requirements related to each revenue arrangement Click here to view the factoritate PRESENT VALLELE Cook here to view the factor table SESENTYALUE OF AN ANNUITY (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to decimal places. e. 5.275.) your answer is partially correct. Try again Blossom sells 3-D printer systems. Recently, Blossom provided a special promotion of zero-interest financing for two years on any new 3D printer system. Assume that Blossom Lyle Cartright a 3-D system, receiving a $6,000 zero interest bearing note on January 1, 2020. The cost of the 3D printer system is $4,500. Blossom imputes a interest rate on this zero-interest note transaction. Prepare the journal entries to record the sale on January 1, 2020. (Credit account titles are automatically indented when the amounts entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter for the amounts.) Date Account Titles and Explanation Debit Credit January 1, 2020 Notes Receivable 6.000 Sales Revenue (To record sales) January 1, 2020 Cost of Goods Sold To record cost Calculate the total amount of revenue to be recognized in 2020 Total revenue for Blossom

Answer 1

Part 1:

Notes Receivable A/c - Dr 6,000

To Sales Revenue 4,800

To Interest Income 1,200.

Since this is a zero interest rate transaction, hence the part of the income which is a financing part will not be recognized as a sales revenue but it will be recognized as a interest income.

Part 2:

The journal entries done are correct. Please check why those entries have been shown as error.

As per the principle, when the gift cards are sold, then those should not be recognized as income, but should be recognized as unearned revenue. And when the customer reedems those gift cards, only then we can recognize them in our revenue. So the entries which are done are principally correct.