Part A:

Taylor Corp. provides consulting services. On January 1, 2022, Taylor completed a consulting project for Stutz Inc. For its services, Taylor agreed to accept a 2-year, $900,000, non-interest-bearing note.

Taylor has excellent credit and its incremental borrowing rate is 9%. Stutz’s incremental borrowing rate is 8%.

Required:

1. Record Taylor’s entry required on January 1, 2022
2. Record Taylor’s entry required on December 31, 2022.

Part B:

In the space below, briefly explain the term LIFO liquidation and the impacts it has on the financial statements.