On January 1, 2012, Durdil Co. borrowed and received $500,000 from a major customer evidenced by a

Question:

On January 1, 2012, Durdil Co. borrowed and received $500,000 from a major customer evidenced by a zero-interest-bearing note due in 3 years. As consideration for the zero-interest-bearing feature, Durdil agrees to supply the customer’s inventory needs for the loan period at lower than the market price. The appropriate rate at which to impute interest is 8%.

Instructions
  (a) Prepare the journal entry to record the initial transaction on January 1, 2012. (Round all computations to the nearest dollar.)
  (b) Prepare the journal entry to record any adjusting entries needed at December 31, 2012. Assume that the sales of Durdil’s product to this customer occur evenly over the 3-year period.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Intermediate Accounting

ISBN: 978-0470587287

14th Edition

Authors: kieso, weygandt and warfield.

Question Posted: