Question: On January 1, 2014, Devlin Co. borrowed and received $200,000 from a major customer evidenced by a zero-interest-bearing note due in 3 years. As consideration

On January 1, 2014, Devlin Co. borrowed and received $200,000 from a major customer evidenced by a zero-interest-bearing note due in 3 years. As consideration for the zero-interest-bearing feature, Devlin 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, 2014. (Round all computations to the nearest dollar.)
(b) Prepare the journal entry to record any adjusting entries needed at December 31, 2014. Assume that the sales of Devlin’s product to this customer occur evenly over the 3-year period.

Step by Step Solution

★★★★★

3.29 Rating (158 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

a Cash 200000 Discount on Notes Payable 41234 Notes Payable 2... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

253-B-A-L (2691).docx

120 KBs Word File

Students Have Also Explored These Related Accounting Questions!

An electric dipole, consisting of two opposite charges of magnitude 2 10 Ceach separated by a distance 3 cm is placed in an electric field of magnitude 2 10 N/C along the direction making 90 with...

On January 1, 2014, Novotna Company purchased $432,800, 8% bonds of Aguirre Co. for $383,865. The bonds were purchased to yield 11% interest. Interest is payable semiannually on July 1 and January 1....

On January 1, 2014, Lock Corporation issued $1,800,000 face value, 5%, 10- year bonds at $1,667,518. This price resulted in an effective-interest rate of 6% on the bonds. Lock uses the...

On January 1, 2017, Bridgeport Co. borrowed and received $513,000from a major customer evidenced by a zero-interest-bearing note due in5years. As consideration for the zero-interest-bearing feature,...

On January 1, 2017, Larkspur Co. borrowed and received $464,000from a major customer evidenced by a zero-interest-bearing note due in4years. As consideration for the zero-interest-bearing feature,...

On January 1, 2007, Devlin Co. borrowed and received $200,000 from a major customer evidenced by a zero-interest-bearing note due in 3 years. As consideration for the zero-interest-bearing feature,...

On January 1, 2007, Devlin Co. borrowed and received $200,000 from a major customer evidenced by a zero-interest bearing note due in 3 years. As consideration for the zero-interest-bearing feature,...

On January 1, 2014, Margaret Avery Co. borrowed and received $446,000 from a major customer evidenced by a zero-interest-bearing note due in 4 years. As consideration for the zero-interest-bearing...

On January 1, 2014, Margaret Avery Co. borrowed and received $400,000 from a major customer evidenced by a zero-interest-bearing note due in 3 years. As consideration for the zero-interest-bearing...

On January 1, 2014, Margaret Avery Co. borrowed and received $496,000 from a major customer evidenced by a zero-interest-bearing note due in 4 years. As consideration for the zero-interest-bearing...

A classmate says, "A weak-field ligand usually means the complex is high spin." Is your classmate correct? Explain.

Write a report to discus, how it can affect a company's success or failure. It has evolved dramatically over the past 50 years and can make the difference between a business reaching its goals or...

What does ccTLDs stand for? Country Code Top - Level - Domain Country Code To - Look - Domain Cite Code Top - Lock - Domain Code Credit To - Look - Domain

5. You are interested in creating a portfolio of two stocksCoca-Cola and Texas Utilities. Over the past decade, an investment in Coca-Cola stock would have earned an average annual return of 25%,...

Analysis of Various Accounting Changes and Errors Various types of accounting changes can affect the financial statements of a business enterprise differently. Assume that the following list...

Analysis of Three Accounting Changes and Errors listed below are three independent, unrelated sets of facts relating to accounting changes. Situation 1 Sanford Company is in the process of having its...

Analysis of Various Accounting Changes and Errors Katherine Irving, controller of Lotan Corp., is aware that a pronouncement on accounting changes has been issued. After reading the pronouncement,...

The prices of 7 toasters x (in dollars) and their corresponding lifespan y (in years) are given in the below. price 32.00 20.50 36.00 44.50 16.50 25.00 38.00 lifespan 8.50 5.20 10.00 12.00 5.50 9.40...

Lewis Securities Inc. has decided to acquire a new market data and quotation system for its Richmond home office. The system receives current market prices and other information from several online...

Content Write a summary of the key elements of a term sheet, as well as the stages of VC funding. Not all startups seek funding from outside investors. However, in the search for a scalable,...