On July 1, 2019, SEK Company sold goods to Grant Company for R$900,000 in exchange for a 4-year, zero-interest-bearing note with a face amount of R$1,416,163. The goods have a cost on SEK’s books of R$590,000. Questions: (a) How much revenue should SEK Company record on July 1, 2019? (b) How much revenue should it report related to this transaction on December 31, 2019?
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A: Introduction
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Facts: On July 1, 2019, SEK Company sold goods to Grant Company for R$900,000 in
exchange for a 4-year, zero-interest-bearing note with a face amount of R$1,416,163. The
goods have a cost on SEK’s books of R$590,000.
Questions: (a) How much revenue should SEK Company record on July 1, 2019? (b) How much
revenue should it report related to this transaction on December 31, 2019?
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- On July 1, 2021, A Company sold goods to a customer for P540,000 in exchange for a 4-year, 12% non-interest bearing note with a face amount of P894,697.80. The goods have a cost of P354,000. Determine the net income related the the sale of goods.On January 1, 2021, Janelle Co. sold equipment to James Inc. in exchange for a zero-interest bearing note with a face value of $110,000, with payment due in 12 months. The fair value of the equipment on the date of the sale was $100,000. Janelle paid $55,000 for the cost of equipment. A. Record the journal entries for January 1, 2021 B. What is the amount of revenue to be recognized on this transaction at December 31, 2021?On January 2, 2020, Adani Inc. sells goods to Geo Company in exchange for a zero-interest-bearing note with face value of $11,000, with payment due in 12 months. The fair value of the goods at the date of sale is $10,000 (cost $6,000). Prepare the journal entry to record this transaction on January 2, 2020. How much total revenue should be recognized in 2020?
- A company sold goods to a customer in exchange for a 5-year, zero-interest-bearing note on January 1, 2021. The note has a face amount of $244,000. The company imputes a 10% interest rate on this zero-interest note transaction. Present value factor for 10% and 5 years, single sum is 0.62. What is the sales revenue the company should record related to this transaction? (Please do not use your own present value tables or financial calculator.) (Please do not round your answer in any part of the computation.)On June 30, 2021, the Esquire Company sold some merchandise to a customer for $30,000. In payment, Esquire agreed to accept a 6% note requiring the payment of interest and principal on March 31, 2022. The 6% rate is appropriate in this situation.Required:1. Prepare journal entries to record the sale of merchandise (omit any entry that might be required for the cost of the goods sold), the December 31, 2021 interest accrual, and the March 31, 2022 collection. (Do not round intermediate calculations.)2. If the December 31 adjusting entry for the interest accrual is not prepared, by how much will income before income taxes be over-or understated in 2021 and 2022?On January 1, 2021, Pharoah Company sold goods to Sheffield Company for $400700 in exchange for a 4-year, zero-interest-bearing note with a face amount of $630507 (imputed rate of 12%). The goods have an inventory cost on Pharoah's books of $240000. What amount of Interest Revenue should Pharoah recognize in 2021? $229807 $57452 $75661 $48084
- On June 30, 2021, the Esquire Company sold some merchandise to a customer for $30,000. In payment, Esquire agreed to accept a 6% note requiring the payment of interest and principal on March 31, 2022. The 6% rate is appropriate in this situation.Required:1. Prepare journal entries to record the sale of merchandise (omit any entry that might be required for the cost of the goods sold), the December 31, 2021 interest accrual, and the March 31, 2022 collection.2. If the December 31 adjusting entry for the interest accrual is not prepared, by how much will income before income taxes be over- or understated in 2021 and 2022?On March 1, 2020, Windsor Company sold goods to Goosen Inc. for $714,000 in exchange for a 5-year, zero-interest-bearing note in the face amount of $1,203,132 (an imputed rate of 11%). The goods have an inventory cost on Windsor’s books of $439,000.(a) Prepare the journal entries for Windsor 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.) (b) Prepare the journal entries for Windsor on December 31, 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.)On January 1, 2019, DEXTER Company sold equipment with a carrying amount of P4,800,000 in exchange for a P6,000,000 non-interest bearing note due January 1, 2022. There was no established exchange price for the equipment. The prevailing rate of interest for a note of this type on January 1, 2019 was 10%. 1. What amount should be reported as gain or loss on sale of equipment? 2. What amount should be reported as interest income for 2019?
- On January 1, 2022, Fulbright Company sold goods to Blue Dirt Company for $400,000 in exchange for a 4-year, zero-interest-bearing note with a face amount of $629,406 (imputed rate of 12%). The goods have an inventory cost on Fulbright's books of $240,000. What amount of sales revenue should Fulbright recognize in 2022?On January 2, 2023, Sunland Inc. sells goods to Bramble Company in exchange for a zero-interest-bearing note with a face value of $7,480, with payment due in 12 months. The fair value of the goods at the date of sale is $6,800 (cost $4,080). Assume that the company chooses to reflect the interest component. (a) Your answer is correct. Prepare the journal entries to record this transaction on January 2, 2023. (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 O for the amounts. List all debit entries before credit entries.) Date Account Titles and Explanation January 2, 2023 Notes Receivable Sales Revenue (To record sales) January 2, 2023 Cost of Goods Sold (b) (c) Inventory (To record cost of goods sold) eTextbook and Media List of Accounts Your answer is correct. How much total revenue should be recognized in 2023? Revenue recognized in 2023 $ eTextbook and…On January 1, 2021, Janelle Co. sold equipment to James Inc. in exchange for a zero-interest bearing note with a face value of $110,000, with payment due in 12 months. The fair value of the equipment on the date of the sale was $100,000. Janelle paid $55,000 for the cost of equipment. Record the journal entries for January 1, 2021 What is the amount of revenue to be recognized on this transaction at December 31, 2021?