Question 1:

On May 31, 2019, John Deere sold a tractor to Dirtco in exchange for a 2-year, $440,000 non-interest-bearing note. Dirtco will make a $100,000 payment on May 31, 2020, and pay a lump sum payment of 340,000 on May 31, 2021. John Deeres year-end is December 31. Assume that your year-end adjusting entries are reversed. Do not show the reversal entry. If you do not know what a reversing journal entry is, it is important that you find out before doing this question. Dirtco would normally pay an interest rate of 6%.

Required

Prepare all journal entries required for the note for John Deere, from the initial sale to repayment. Count exact days for the year-end interest revenue adjustment. Calculate and journalize amounts to the nearest dollar.