On Jan. first, 2018, Snuff Company accepts 60000 non-interest bearing note from a customer for the...

On Jan. first, 2018, Snuff Company accepts 60000 non-interest bearing note from a customer for the sale of goods. The note is to be paid in 3 equal installments every Dec. 31st (first payment on Dec. 31, 2018). An assumed interest rate of 10% is implied. Round installment payments to the nearest dollar.

pt 1: Determine the PV of the note. Show all computations or calculator imputs.

pt 2: Prepare an amortization table in Excell to show the revenue recognized each year

pt 3: Prepare the journal entries for the dates listed below.

jan 1, 2018

Dec 31,2018

Dec 31, 2019

Solutions

Expert Solution


	Annual installment	20000
	PV factor for annuity n= 3 i = 10%	2.48685
	Present value of notes payable	49737

		Annual installment	Interest revenue	Amortized value	Carrying value
					49737
	Year 1	20000	4974	15026	34711
	Year 2	20000	3471	16529	18182
	Year 3	20000	1818	18182	0

01-Jan-18	Notes receivable	49737
	Discount on notes	10263
	Sales revenue		60000

31-Dec-18	Cash	20000
	Interest revenue		4974
	Notes receivable		15026

31-Dec-18	Cash	20000
	Interest revenue		3471
	Notes receivable		16529

ekkarill92 answered 1 year ago

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