On January 1, 2018, Wright Transport sold four school buses to the Elmira School
ID: 2543071 • Letter: O
Question
On January 1, 2018, Wright Transport sold four school buses to the Elmira School District. In exchange for the buses, Wright received a note requiring payment of $523,000 by Elmira on December 31, 2020, The effective interest rate is 6%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.): Required: 1. How much sales revenue would Wright recognize on January 1, 2018, for this transaction? 2. Prepare journal entries to record the sale of merchandise on January 1, 2018 (omit any entry that might be required for the cost of the goods sold), the December 31, 2018, interest accrual, the December 31, 2019, interest accrual, and receipt of payment of the note on December 31, 2020. Complete this question by entering your answers in the tabs below. Required 1 Required 2 How much sales revenue would Wright recognize on January 1,2018, for this transaction? (Round your final answer to nearest whole number.) Sales revenueExplanation / Answer
Answer:
A) record the sale of goods on January 2018
Description
Debit $
Credit $
Note Receivable
523,000.00
discount on note receivable
83,879
sales revenue
439,121.26
(523,000*PVIF,3 year ,6%)
=523000*0.83962
=439,121.26
______________________________
B)
Record the interest accrual on December 31, 2018
Description
Debit $
Credit $
discount on note receivable
26347
Interest revenue (439,121.26*6%)
26347
______________________________
C)
Record the interest accrual on December 31, 2019
Description
Debit $
Credit $
discount on note receivable
27,928.11
Interest revenue
27,928.11
Working
$ 439,121.26
original balance
26347
interest added
$ 465,468.54
current loan balance
_________________________________________
D)
Record the interest revenue in 2020 and collection of the note.
Description
Debit $
Credit $
cash
$ 523,000.00
discount on note receivable
$ 29,603
interest revenue
$ 29,603
note receivable
$ 523,000.00
$ 465,468.54
original balance
27928
interest added
$ 493,396.65
current loan balance
Interest revenue
=467049.37*6%
=29603
Description
Debit $
Credit $
Note Receivable
523,000.00
discount on note receivable
83,879
sales revenue
439,121.26
(523,000*PVIF,3 year ,6%)
=523000*0.83962
=439,121.26