On January 1, 2018, Hicks Corp. sold inventory costing $32,000 and received $6,000 cash and a $40,000

Question:

On January 1, 2018, Hicks Corp. sold inventory costing $32,000 and received $6,000 cash and a $40,000 promissory note. The five-year note was repayable at $8,734 per annum including interest at 3%. The market rate of interest for similar transactions was 7%. The first payment was due on January 1, 2019.
Hicks Corp. had a December 31 year-end and prepared its financial statements in accordance with IFRS. It did not prepare interim statements or make accruals during the year.

Required:
Prepare journal entries to record:
a. The sale of inventory.
b. Interest revenue earned in 2018.
c. Receipt of the loan payment on January 1, 2019.
d. Interest revenue earned in 2019.

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...

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