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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