On January 1, 2019, Fulton Inc. enters into a contract with Gibson to deliver goods. Gibson pays $100,000 at the time the contract is signed, at which time the goods are transferred and Fultons performance obligation is complete. In addition, Gibson agrees to pay Fulton $100,000 on December 31, 2019, and December 31, 2020. If Fulton entered into a financing arrangement with Gibson it would charge an interest rate of 9%.

Required:

1.	Determine the transaction price for the contract with Gibson.
2.	Prepare the journal entries to record Fultons 2019 sales revenue and interest revenue.
3.	Next Level What is the objective of adjusting the transaction price to reflect the time value of money?

CHART OF ACCOUNTS

Fulton Inc.

General Ledger

	ASSETS
111	Cash
121	Accounts Receivable
131	Notes Receivable
132	Discount on Notes Receivable
141	Inventory
152	Prepaid Insurance
181	Equipment
198	Accumulated Depreciation

	LIABILITIES
211	Accounts Payable
231	Salaries Payable
250	Unearned Revenue
261	Income Taxes Payable

	EQUITY
311	Common Stock
331	Retained Earnings

	REVENUE
411	Sales Revenue
431	Interest Income

	EXPENSES
500	Cost of Goods Sold
511	Insurance Expense
512	Utilities Expense
521	Salaries Expense
532	Bad Debt Expense
540	Interest Expense
541	Depreciation Expense
559	Miscellaneous Expenses
910	Income Tax Expense

1. Determine the transaction price for the contract with Gibson.

Additional Instructions

Transaction price

2. Prepare the journal entries to record Fultons sales revenue on January 1 and interest revenue on December 31.

General Journal Instructions

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GENERAL JOURNAL

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
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