Question

Exercise 7-14 On December 31, 2015, Carla Co performed environmental consulting services for Hayduke Co. Hayduke was short of cash and Carl C reed to a $340,000 monterest-bearing note de December 31, 2017, as payment in U Hayduke is somewhat of a credit risk and typically borrows funds at a rate of 12 Carla is much more creditworthy and has various lines of credit at 6%. Prepare the journal entry to record the transaction of December 31, 2015, for the Carta Co (Round present value f or calculation to decal s 1.251 ialaswers to O decimal places, .g. 5. 275. I no entry is required lect"Ne Entry for the accounts and enter for the amounts. Cred accountries are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation Dec 31, 2015

Answer 1

Answer:

Date	Particulars	Debit ($)	Credit ($)
Dec 31 2015	Notes Receivable	$340,000
	Discount on Notes Receivable (340000-271044.6)		$68,955.4
	Service Revenue (340000*pv factor for second year at 12%)		$271,044.6
Dec 31 2016	Discount on Notes Receivables (271044.6*12%)	$32,525
	Interest Revenue		$32,525
Dec 31 2017	Discount on notes Receivable (340000-(340000*PV factor at 12% for 1 year))	$36,427.6
	Interest Revenue		$36,427.6
	Cash	$338600
	Interest Receivable		$338600