Possible JE's:

Cash, Deferred Revenue, Interest Expense, Liability for Volume Discount, Sales Revenue

Problem 5 (sale with time value of money, IE-type II] On January 1, 2020, ABC contracted with XYZ to manufacture a special-order product to be delivered in 12 months. XYZ prepays the purchase price of 100,000 on January 1, 2020. No further payments are required. ABC deems the financing component of the transaction to be significant and determines that an interest rate of 10%/year is appropriate. 1. Prepare the journal entry made by ABC to record the receipt of the prepayment on January 1, 2020. Enter your answer below. Choose the account from the drop-down list in the yellow cell. Enter the amount of the entry in the green box. Credit Entry on January 1, 2020: Account Cash Sales revenue Debit $100,000 1 $100,000 1 2. Prepare the journal entry made by ABC on December 31, 2020 when delivery occurs. Enter your answer below. Choose the account from the drop-down list in the yellow cell. Enter the amount of the entry in the green box. Entry on December 31, 2020: Account Debit Credit 2 2 2