Assignment 2 Fall 2021
- On January 1, 2020, Happy Inc. sold a hot tub to Monica, receiving a two-year, noninterest-bearing note of $9,680 in exchange for a hot tub that normally sells for $8,000. The note is for an amount that achieves an effective interest rate of 10% per year.
Required:
- Prepare the journal entry to record the sale.
2. Prepare any adjusting entry necessary on December 31, 2020.
3. Prepare any adjusting entry necessary on December 31, 2021 [maturity]. -
[1] On October 1, 20×1, Metro Bank loaned $8,000,000 and received a 5-month promissory note with 10% interest payable at maturity. Metro’s fiscal year ends on December 31.
[2] Metro recorded accrued interest on December 31, 20×1.
[3] Metro received the promissory note on the March 1, 20×2 due date.
Required: prepare the appropriate journal entries.
III. On April 7, 2020, Wilhelm, Inc. sold goods for $50,000 and accepted a 10%, 60-day note. On April 22, 2020, the company sold the note to a bank at a 13% discount rate.
Required:
Compute the amount of cash received from the sale [discounting].
