Zahava Corporation sells equipment to Ari Company for $700,000 on December 31, 2019. The two companies agree that Ari will pay $100,000 upon delivery (December 31, 2019), with the remaining $600,000 due on December 31, 2021. Zahava is confident that Ari will make the promised payment. Ari typically can borrow at 5%.
Required:
1. Prepare the journal entry Zahava makes to record the transaction on December 31, 2019.
2. Prepare the journal entry, if any, Zahava makes in 2020.
3. Prepare the journal entry Zahava makes to record collection of the remaining $600,000 on December 31, 2021.