Ask Question
11 April, 23:56

Chen inc. accepted a two-year non interest-bearing note for $605,000 on january 1, 2016. the note was accepted as payment for merchandise with a fair value of $500,000. the effective interest rate is 10%. what is the correct entry to record the note

+2
Answers (1)
  1. 12 April, 00:07
    0
    This would be the journal entry to record the transaction for the non-interest bearing note:

    January 1, 2016

    Debit Notes Receivable 605,000

    Credit Discount on notes receivable (605,000 - 500,000) 105,000

    Credit Sales Revenue 500,000

    As for the interest at the end of the month

    Debit Discount on notes receivable 2,520.83

    Credit Interest Revenue 2,520.83

    Computation: 605,000 x. 10 divided by 24 since it is 2 years
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Chen inc. accepted a two-year non interest-bearing note for $605,000 on january 1, 2016. the note was accepted as payment for merchandise ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers