NOTES RECEIVABLE Portuguese, Inc., a truck dealership, sells a truck costing $18,000 to Undervalued Company on January 1, 2009, in exchange for a $40,000 note bearing 9 percent interest.

Required:

. Prepare the journal entry to record the sale on January 1, 2009.

. Determine how much interest Portuguese will receive if the note is repaid on July 1, 2009.

. Provide Portuguese’s journal entry to record the cash received to pay off the note and interest on July 1, 2009.

Cornerstone Exercise