Cambria Limited took a $400,000 two-year note receivable from a customer in connection with a major inventory sale transaction on 1 January 20X5. The note required annual end-of-year interest payments of 4%, and the principal was due at the end of 20X6. (PV of $1. PVA of S1, and PVAD of S1) (Use appropriate factor(s) from the tables provided.) Required: 1. Prepare journal entries to record the initial sale transaction and each payment on the books of Cambria, assuming that the market interest rate is 4%. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round time value factor to 5 decimal places and final answers to the nearest whole dollar amount.) View transaction list View journal entry worksheet No 1 General Journal Date 1 January 20x5 Credit Notes receivable Sales revenue Debit 400,000 400,000 2 - 31 December 20x5 Cash Interest revenue 16,000 16.000 3 31 December 20X6 Cash 416.000 Interest revenue Notes receivable 16.000 400.000 2. Assume now that the market interest rate is 8% Calculate the present value of the note, and prepare a schedule that shows the annual interest. (Round time value factor to 5 decimal places and final answers to the nearest whole dollar amount. Enter all answers in positive.) Present value Opening Net Liability! Receivable Interest Expense/Revenue Interest Paid! Received Discount Amortization Closing Net Liability! Receivable 3. Prepare journal entries to record the initial sale transaction and each payment on the books of Cambria, consistent with requirement 2. Use the gross method to record the note. (if no entry is required for a transaction/event, select "No journal entry required in the first account field. Round time value factor to 5 decimal places and final answers to the nearest whole dollar amount.) View transaction list Journal entry worksheet 1 2 3 Record the initial sales revenue with discount. Note: Enter debits before credits. Date General Journal Debit Credit 1 January 20X5 Recordently Clear entry V entallonal 4. Not available in connect. 5. Prepare journal entries to record the initial sale transaction and each payment on the books of the customer who bought inventory and owes the note, consistent with requirement 2. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round time value factor to 5 decimal places and final answers to the nearest whole dollar amount.) View transaction list Journal entry worksheet 23 Record the issue of notes payable. Note Enter debits before credits. Date General Journal Debit Credit 1 January 20X5
