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On April 15, 2021, Sampson Consulting provides services to a customer for $99,000. To pay for the services, the customer signs a three-year, 12% note.
On April 15, 2021, Sampson Consulting provides services to a customer for $99,000. To pay for the services, the customer signs a three-year, 12% note. The face amount is due at the end of the third year, while annual interest is due each April 15. (Hint: Because the note is accepted during the middle of the month, Sampson plans to recognize one-half month of interest revenue in April 2021, and one-half month of interest revenue in April 2024.)
- Record the acceptance of the note on April 15, 2021.
- Record the interest collected on April 15 for 2022 and 2023, and the adjustment for interest revenue on December 31, 2021, 2022, and 2023.
- Record the cash collection on April 15, 2024.
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