Question
NEED PART B On January 1, 2017, Pina Co. borrowed and received $478,000 from a major customer evidenced by a zero-interest-bearing note due in 3
NEED PART B
On January 1, 2017, Pina Co. borrowed and received $478,000 from a major customer evidenced by a zero-interest-bearing note due in 3 years. As consideration for the zero-interest-bearing feature, Pina agrees to supply the customers inventory needs for the loan period at lower than the market price. The appropriate rate at which to impute interest is 10%.
(a) | Prepare the journal entry to record the initial transaction on January 1, 2017. | |
(b) | Prepare the journal entry to record any adjusting entries needed at December 31, 2017. Assume that the sales of Pinas product to this customer occur evenly over the 3-year period. |
No. | Date | Account Titles and Explanation | Debit | Credit |
(a) | January 1, 2017 |
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(b) | December 31, 2017 |
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(To record Interest Expense) | ||||
December 31, 2017 |
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(To record Unearned Sales Revenue) |
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