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On January 1, 2017, Fullbright Company sold goods to Blue Dirt Company for $400,000 in exchange...

On January 1, 2017, Fullbright Company sold goods to Blue Dirt Company for $400,000 in exchange for a 4-year, zero-interest-bearing note with a face amount of $629,406 (imputed rate of 12%). The goods have an inventory cost on Fullbright’s books of $240,000. What amount of Interest Revenue should Fullbright recognize in 2017?

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Answer #1

Sale price of goods = $400,000

Interest rate = 12%

Interest revenue to be recognized in 2017 = Annual receivable x Interest rate

= 400,000 x 12%

= $48,000

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