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On January 1 , Year 1 , Fulton Inc. enters into a contract with Gibson to deliver goods. Gibson pays $ 1 0 0 ,

On January 1, Year 1, 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 Fulton's performance obligation is complete. In addition, Gibson agrees to pay Fulton $100,000 on December 31, Year 1, and December 31, Year 2. If Fulton entered into a financing arrangement with Gibson, it would charge an interest rate of 9%.
Required:
Determine the transaction price for the contract with Gibson.
Prepare the journal entries to record Fulton's Year 1 sales revenue and interest revenue.
Next Level What is the objective of adjusting the transaction price to reflect the time value of money?
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