Question
Joes Consulting Services Inc. provided services to 2 customers in January 2021. Joes completed the work and billed the customers for the services on January
Joes Consulting Services Inc. provided services to 2 customers in January 2021. Joes completed the work and billed the customers for the services on January 31, 2021. Due to the tough circumstances existing in COVID, Joes provided the customers some extended payment terms as follows: Customer A - $5,000 note, bearing interest at 10% (market rate) with principal and interest due January 31, 2022. Customer B - $7,000 note, non-interest bearing, due January 31, 2022. (Customer B was a new business just starting out as COVID restrictions started so Joes gave them some special treatment) Both notes were paid to Joes in full when due.
Required:
(a) How much Service Revenue will be recorded for each customer at January 31, 2021?
b) How much Interest Revenue will be recorded for each customer over the full term of the note?
c) How much cash will be collected on January 31, 2022 from each customer?
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