On January 1, 2018, Wright Transport sold four school buses to the Elmira School
ID: 2564264 • Letter: O
Question
On January 1, 2018, Wright Transport sold four school buses to the Elmira School District. In exchange for the buses, Wright receiv note requiring payment of $515,000 by Elmira on December 31, 2020. The effective interest rate is 8%EVOfSL P of$1. EVAof 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 the goods sold), the December 31, 2018, interest accrual, the December 31, 2019, interest accrual, and receipt of payment of the n on December 31, 2020. Complete this question by entering your answers in the tabs below. Required Required 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. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations and round your final answers to nearest whole number.) show less View transaction listExplanation / Answer
1)Present value of Note :PVF8%,3 *NOTE face value
= .79383*515000
= $ 408,823.60
sales reveue To recognised : $ 408,823.60
2)
Date Account Debit credit 1 jan 2018 Note receivable 515,000 Discount on note receivable 106,176.40 Sale revenue 408,823.60 [being sale recorded] Dec 31 2018 Discount on note receivable 32705.89 Interest revenue [408823.60*.08] 32705.89 [Interest accrued ] dec 31 2019 Discount on note receivable 35322.36 Interest revenue [408,823.60+32705.89]*.08 35322.36 [Interest accrued for 2018] Dec 31 2020 Discount on note receivable 38148.15 Interest revenue [408823.60+32705.89+35322.36]*.08 38148.15 [Interest accrued] 31 dec 2020 Cash 515000 Note receivable 515000