SorCo. Inc. has just entered into a sale agreement with a customer. The contract is for $1,100,000.
Question:
SorCo. Inc. has just entered into a sale agreement with a customer. The contract is for $1,100,000. However, the payments will be made as follows: 1 August 20X1 on date of delivery $500,000; 1 August 20X2 $300,000 and 1 August 20X3 $300,000. SorCo has estimated that the interest rate required for this customer is 7%.
Required:
Prepare the journal entry required to record the sale on 1 August 20X1 and the receipt of cash on 1 August 20X2 and 20X3.
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With the delayed payments the contract consideration is the present value of the future cash flows ...View the full answer
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Related Book For 
Intermediate Accounting Volume 1
ISBN: 9781260306743
7th Edition
Authors: Thomas H. Beechy, Joan E. Conrod, Elizabeth Farrell, Ingrid McLeod Dick
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