Arctic Cat sold Seneca Motor Sports a shipment of snowmobiles
that have a fair market value of $32,500. Seneca paid for the
snowmobiles on January 1, 2021, with delivery to occur
subsequently. 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 10%. (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:
Assume that, on January 1, 2021, Seneca prepays Arctic for a December 31, 2021 delivery of the snowmobiles. Prepare the journal entry for Arctic to record collection on January 1, 2021, assuming Seneca prepays the present value of the snowmobiles.
Prepare the journal entry for Arctic to record delivery of the snowmobiles on December 31, 2021.
Assume instead that delivery is to occur on December 31, 2022. Prepare the journal entry for Arctic to record collection on January 1, 2021, assuming Seneca prepays the present value of the snowmobiles.
Assume instead that Arctic does not view the time value of money component of this arrangement to be significant. Also assume that, on January 1, 2021, Seneca prepays Arctic for a December 31, 2021 delivery of the snowmobiles, and that Seneca prepays the present value of the snowmobiles. Prepare the journal entry for Arctic to record collection 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.)
Date | General Journal | Debit | Credit |
1-Jan-21 | Cash ($32,500 x PV(10%,1) | $29,545.45 | |
Deferred Revenue | $29,545.45 | ||
31-Dec-21 | Interest Expenses | $2,954.55 | |
Deferred Revenue | $29,545.45 | ||
Sales Revenue | $ 32,500.00 | ||
31-Dec-21 | Cash ($32,500 x PV(10%,1) | $29,545.45 | |
Deferred Revenue | $29,545.45 | ||
31-Dec-21 | Cash ($32,500 x PV(10%,1) | $29,545.45 | |
Deferred Revenue | $29,545.45 |
Arctic Cat sold Seneca Motor Sports a shipment of snowmobiles that have a fair market value...
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