Question
On January 1, 2020,AyayaiCo. borrowed and received $478,000from a major customer evidenced by a zero-interest-bearing note due in3years. As consideration for the zero-interest-bearing feature,Ayayaiagrees to
On January 1, 2020,AyayaiCo. borrowed and received $478,000from a major customer evidenced by a zero-interest-bearing note due in3years. As consideration for the zero-interest-bearing feature,Ayayaiagrees to supply the customer's inventory needs for the loan period at lower than the market price. The appropriate rate at which to impute interest is10%.
Prepare the journal entry to record the initial transaction on January 1, 2020.
Prepare the journal entry to record any adjusting entries needed on December 31, 2020. Assume that the sales ofAyayai's product to this customer occur evenly over the3-year period.
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Fundamental Managerial Accounting Concepts
Authors: Thomas Edmonds, Christopher Edmonds, Bor Yi Tsay, Philip Old
7th edition
978-0077632427, 77632427, 78025656, 978-0078025655
