Question

In: Accounting

On March 1, 2020, Crane Company sold goods to Goosen Inc. for $702,000 in exchange for...

On March 1, 2020, Crane Company sold goods to Goosen Inc. for $702,000 in exchange for a 5-year, zero-interest-bearing note in the face amount of $1,182,911 (an inputed rate of 11%). The goods have an inventory cost on Crane’s books of $395,000.

(a) Prepare the journal entries for Crane on March 1, 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)

Date

Account Titles and Explanation

Debit

Credit

Mar. 1, 2020

(To record sales)

(To record cost of goods sold)


(b) Prepare the journal entries for Crane on December 31, 2020.

Solutions

Expert Solution

Date Accounts Title Debit Credit
a)Mar 1 2020 Notes Receivable $ 1,182,911
      Sales $   702,000
      Discount on Notes Receivable (Balance) $   480,911
(To record the sales with discount)
Mar 1 2020 Cost of Goods Sold $     395,000
       Inventory $   395,000
(To record Cost of goods sold)

b)

Dec 31 2020

 Discount on Notes Receivable $        64,350
       Interest $      64,350
(To record the Imputed interest )
*Interest= $702000*11%*10/12= $64,350

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ekkarill92 answered 2 years ago
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