Zahava Corporation sells equipment to Ari Company for $700,000. Ari does not need the equipment until December 31, 2021, but agrees to pay $600,000 immediately on December 31, 2019, in order to assist Zahava with its finances. The remaining $100,000 is due upon delivery on December 31, 2021. Zahava typically can borrow at 5%.
Required:
1. Prepare the journal entry Zahava makes to record the receipt of $600,000 on December 31, 2019.
2. Prepare the journal entry, if any, Zahava makes in 2020.
3. Prepare the journal entry Zahava makes to record delivery of the goods and collection of the remaining $100,000 on December 31, 2021.