Accounts: Cash, Interest Revenue, Sales Revenue, Notes Receivable, Discount on Note Receivable

Problem 6 (sale with time value of money, IR On January 1, 2020, ABC sold and delivered a product to XYZ. ABC allows XYZ to delay payment for twelve months, at which time XYZ will pay ABC $20,000. ABC deems the financing component of the transaction to be significant and decides that an applicable interest rate is 10%. 1. Prepare the entry made by ABC on January 1, 2020 to record the sale. 2. Prepare the entry made by ABC on December 31, 2020 to record the $20,000 payment