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Gary Snail Inc., received a 3-year non-interest bearing trade note for 50,000 on January 1, 2021. The current interest rate at that time was 15%
Gary Snail Inc., received a 3-year non-interest bearing trade note for 50,000 on January 1, 2021. The current interest rate at that time was 15% for similar notes. Gary Snail recorded the receipt of the note as follows:
(Dr) Notes receivable - trade50,000
(Cr) Sales50,000
The effect of this accounting for the notes receivable Gary Snail's profit for years 2011, 2022 and 2023 and retained earnings at the end of 2023, respectively, shall to
A.overstate, overstate, understate, no effect
- overstate, understate, understate, no effect
- overstate, understate, understate, understate
- no effect on any of these
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