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On September 1, 2021, Company sold inventory in exchange for a 2-year non-interest-bearing note having a face value of $26,000. The present value of this
On September 1, 2021, Company sold inventory in exchange for a 2-year non-interest-bearing note having a face value of $26,000. The present value of this note has already been determined to be $20,727. 12% is a reasonable cost of borrowing for non-interest bearing notes of this nature. The notes face value is due to be paid back on September 1, 2023. company has a calendar year-end, uses the effective interest method, and uses the periodic inventory system. Prepare journal entries for the dates 9/1/21, 12/31/21, 12/31/22, and 9/1/23.
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