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step by step please On January 1, 2019, Merck Manufacturing borrowed and received $2,000,000 from one of its major customers, Felix Innovations by signing a
step by step please On January 1, 2019, Merck Manufacturing borrowed and received $2,000,000 from one of its major customers, Felix Innovations by signing a zero-interest bearing note with a maturity value of $2,000,000 due in five years. The appropriate rate of interest applicable to this note (based on prime interest rate, borrower's credit rating and general market interest rate of similar note) is 6%. As a consideration, Merck agrees to sell inventories to Felix during the loan period of five years at a price lower than the prevailing market price of inventories. A) Prepare the journal entry in Merck's book to record the transaction on January 1, 2019. Show your supporting calculations. B) What will be the price adjustment by Merck for Felix Innovations each year over the five-year period? C) Prepare the adjustment journal entries in Merck's book to record the adjustments needed on December 31,2019. Merck's sales to Felix Innovations for the year 2019 is $445.000
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