A10 fx D E B On January 1, 2020, Arctic Cat sold Seneca Motor Sports a shipment of snowmobiles that have a fair market value of $44,000. Because of limited space, Seneca wanted to delay delivery until December 31, 2020 but offered to make up-front payment in full) on January 1, 2020. Arctic agreed and as a concession reduced the sales price to $40,000 since Seneca paid 12 months in advance of delivery. So, the contract was: Seneca pays $40,000 cash to Arctic Cat on January 1, 2020 and Arctic Cat delivers the snowmobiles on December 31, 2020. Arctic views the time value of money component of this arrangement to be significant and that the relevant interest rate is 10% Debit Credit 1 2 3 Required: 1. Prepare Artic Cat's journal entries at January 1, 2020 to record the advance 4 payment of $40,000 2. Prepare any entry needed by Artic Cat on December 31, 2020 when the 5 snowmobiles are delivered. 6 7 Entry on January 1, 2020: 8 9 Account 10 11 12 13 14 Entry on December 31, 2020: 15 16 Account 17 18 19 20 21 22 23 1 1 1 Debit Credit NN 2 D E On January 1, 2020, Arctic Cat sold Seneca Motor Sports a shipment of snowmobiles that have a fair market value of $44,000. Because of limited space, Seneca wanted to delay delivery until December 31, 2020 but offered to make up-front payment in full) on January 1, 2020. Arctic agreed and as a concession reduced the sales price to $40,000 since Seneca paid 12 months in advance of delivery. So, the contract was: Seneca pays $40,000 cash to Arctic Cat on January 1, 2020 and Arctic Cat delivers the snowmobiles on December 31, 2020. Arctic views the time value of money component of this arrangement to be significant and that the relevant interest rate is 10% Debit Credit 1 2 3 Required: 1. Prepare Artic Cat's journal entries at January 1, 2020 to record the advance 4 payment of $40,000 2. Prepare any entry needed by Artic Cat on December 31, 2020 when the 5 Snowmobiles are delivered 6 7 Entry on January 1, 2020: 8 9 Account 10 11 12 13 Bonus receivable 14 Cash 15 Deferred revenue 16 Discount on notes receivable ht 17 18 Interest expense 19 Interest revenue 20 Liability for volume discount 21 Notes receivable 22 Sales revenue 23 24 25 1 1 1 Debit Credit NNN