Question

On December 31, 2015, Ayayai Co. performed environmental consulting services for Hayduke Co. Hayduke was short of cash, and Ayayai Co. agreed to accept a $252,100 zero-interest-bearing note due December 31, 2017, as payment in full. Hayduke is somewhat of a credit risk and typically borrows funds at a rate of 10%. Ayayai 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 Ayayai Co. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 5,275. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
Dec. 31, 2015

Assuming Ayayai Co.’s fiscal year-end is December 31, prepare the journal entry for December 31, 2016. (Round answers to 0 decimal places, e.g. 5,275. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
Dec. 31, 2016

Answer 1

Date	Account Titles and Explanations	Debit	Credit
31-Dec	Notes receivable	$252,100
	Discount on notes receivable		43,752
	Sales revenue ($252,100*.82645)		208,348
31-Dec	Discount on notes receivable (208348*10%)	20835
	Interest revenue		20835
Dec-31	Discount on notes receivable	22917
	Interest revenue (43752 - 20835)		22917
	Cash	252100
	Notes receivable		252100