Problem 18B-8 Presented below are two independent revenue arrangements for Prong
ID: 2599531 • Letter: P
Question
Problem 18B-8 Presented below are two independent revenue arrangements for Pronghorn Company Respond to the requirements related to each revenue arrangement. Pronghorn sells 3D printer systems. Recently, Pronghorn provided a special promotion of zero-interest financing for 2 years on any new 3D printer system Assume that Pronghorn sells Lyle Cartright a 3D system, receiving a $5,500 zero-interest-bearing note on January 1, 2017. The cost of the 3D printer system is $4,400. Pronghorn imputes a 6% interest rate on this zero-interest note transaction. Prepare the o rnal entry to record esa e on January , 207 and compute the total amount of revenue to be recognized in 2017. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971) Account Titles and Explanation Debit Credit Notes Receivable 5500 Discount on Notes Receivable Sales Revenue (To record sales) Cost of Goods Sold 4400 Inventory 4400 To record cost of goods sold)Explanation / Answer
1) Journal Entry
Note:- As per guidline I have answered 1st part of question.
Date Accounts Debit$ Credit$ 1/1/2017 Notes Receivable $ 5,500 Discount on Notes Receivable $ 605 Sales Revenue ($5500* PVIF(2yrs,6%)($5500*0.8899) $ 4,895 (To record Sales) 1/1/2017 Cost of Goods Sold $ 4,400 Inventory $ 4,400 (To record cost of goods sold)