Question

On March 1, 2017, Parnevik Company sold goods to Goosen Inc. for $660,000.00 in exchange for a 5-year,
zero-interest bearing note. This note has an imputed annual interest rate of 10.00%. The goods have an inventory
cost on Parnevik's books for $400,000.00.
Prepare the general journal for Parnevik Company on March 1, 2017 to record this transaction.
(check figure: Discount on Notes Receivable = $402,936.60)

Answer 1

Solution:

Fair value of goods sold = $660,000 * PV factor at 10% for 5th period

= $660,000 * 0.62092 = $409,807.20

Journal Entries - Parnevik Company
Date	Particulars	Debit	Credit
1-Mar-17	Note receivables Dr	$660,000.00
	To Sales revenue		$409,807.20
	To Discount on note receivables		$250,192.80
	(To record sales revenue)
1-Mar-17	Cost of goods sold Dr	$400,000.00
	To Inventory		$400,000.00
	(To record cost of goods sold)