Cambria Limited took a $220,000 two-year note receivable from a customer in connection with a major inventory sale transaction on 1 January 20X5. The note required annual end-of-year interest payments of 6%, and the principal was due at the end of 20X6.

Required: 

1. Prepare journal entries to record the initial sale transaction and each payment on the books of Cambria, assuming that the market interest rate is 6%. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round time value factor to 5 decimal places and final answers to the nearest whole dollar amount.) 

2. Assume now that the market interest rate is 12%. Calculate the present value of the note, and prepare a schedule that shows the annual interest. (Round time value factor to 5 decimal places and final answers to the nearest whole dollar amount. Enter all answers in positive.) 

3. Prepare journal entries to record the initial sale transaction and each payment on the books of Cambria, consistent with requirement 2. Use the gross method to record the note. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round time value factor to 5 decimal places and final answers to the nearest whole dollar amount.) 

4. Not available in connect. 

5. Prepare journal entries to record the initial sale transaction and each payment on the books of the customer who bought inventory and owes the note, consistent with requirement 2. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round time value factor to 5 decimal places and final answers to the nearest whole dollar amount.)

Answer rating: 100% (QA)

1 Journal enteries Particulars Debit Credit 1012015 Notes Receivabe 22000000 Sales Revenue 22000000 ... View the full answer