On January 2, 2020, Kingbird Inc. sells goods to Blossom Company in exchange for a zero-interest-bearing note with a face value of $8,140, with payment due in 12 months. The fair value of the goods at the date of sale is $7,400 (cost $6,900). Assume that

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On January 2, 2020, Kingbird Inc. sells goods to Blossom Company in exchange for a zero-interest-bearing note with a face value of $8,140, with payment due in 12 months. The fair value of the goods at the date of sale is $7,400 (cost $6,900). Assume that

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Answer 1

Answer #1

Date	Account Titles	Debit	Credit
Jan. 2	Accounts Receivable	$ 7,400
	Sales Revenue		$ 7,400

Jan. 2	Cost of Goods Sold	$ 6,900
	Merchandise Inventory		$ 6,900

Revenue recognized in 2020 = $8140

Interest Rate = ($8140-7400) / 7400 = 10%

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Answer 2

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On January 2, 2020, Kingbird Inc. sells goods to Blossom Company in exchange for a zero-interest-bearing note with a face value of $8,140, with payment due in 12 months. The fair value of the goods at the date of sale is $7,400 (cost $6,900). Assume that

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On January 2, 2020, Kingbird Inc. sells goods to Blossom Company in exchange for a zero-interest-bearing note with a face value of $8,140, with payment due in 12 months. The fair value of the goods at the date of sale is $7,400 (cost $6,900). Assume that