On January 2, 2020, Adani Inc. sells goods to Geo Company in exchange for a zero-interest-bearing note
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On January 2, 2020, Adani Inc. sells goods to Geo Company in exchange for a zero-interest-bearing note with a face value of $11,000, with payment due in 12 months. The fair value of the goods at the date of sale is $10,000 (cost $6,000). Assume that the company chooses to reflect the interest component.
(a) Prepare the journal entries to record this transaction on January 2, 2020.
(b) How much total revenue should be recognized in 2020?
(c) Using Excel or a financial calculator, determine the interest rate that will be earned by Adani.
Face ValueFace value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...
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Related Book For 
Intermediate Accounting Volume 1
ISBN: 978-1119496496
12th Canadian edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Irene M. Wiecek, Bruce J. McConomy
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