Question: On December 31 2014 Zhang Ltd rendered services to BeggyCorp

On December 31, 2014, Zhang Ltd. rendered services to BeggyCorp. at an agreed price of $91,844.10. In payment, Zhang accepted $36,000 cash and agreed to receive the balance in four equal installments of $18,000 that are due each December 31. An interest rate of 11% is applicable.
Instructions
(a) Prepare the entries recorded by Zhang Ltd. for the sale and for the receipts including interest on the following dates:
1. December 31, 2014
2. December 31, 2015
3. December 31, 2016
4. December 31, 2017
5. December 31, 2018
(b) From Zhang Ltd.’s perspective, what are the advantages of an installment note compared with a non-interest bearing note?

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  • CreatedSeptember 18, 2015
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