Question

Bauer will receive $220,000 next year from Rice as payment for delivered goods that have a fair value of $190,000. Assume that the time value of money is viewed as significant for this contract. Bauer’s journal entry at the time of revenue recognition will not include

	a.	credit Notes Receivable of $220,000
	b.	All entries will be included
	c.	credit Sales Revenue of $190,000
	d.	debit Notes Receivable of $220,000
	e.	credit Discount on Notes Receivable of $30,000

Answer 1

SOLUTION:
		Sales Revenue =	$                 190,000
		Discount on note receivables	$                   30,000
		Note Receivable	$                 220,000
	Journal entry at the time of revene recognition is as below,
	Journal Entries
	Date	Account Title and explanation	Debit	Credit
	----------	Note Receivables	$                 220,000
		Sales Revenue		$              190,000
		Discount on Note Receivables		$                30,000
		(To Record the salary Expenses of month end)
	As per the above explanation,
	Credit to Note receivable of $ 220,000 is not included in above entry,
	Answer = Option A