On January 1, 2017, Kingbird Inc. borrowed and received $200,000 from a major customer, Ayayai Corp....
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On January 1, 2017, Kingbird Inc. borrowed and received $200,000 from a major customer, Ayayai Corp. The debt is evidenced by a zero-interest-bearing note due in 4 years. Kingbird, as consideration for the zero-interest-bearing feature of the note, agrees that it will supply inventory to Ayayai for the loan period at a below-market price. The appropriate rate at which to impute interest is 7%. Prepare the journal entries to record any adjusting entries needed at December 31, 2017. Assume that the sales of Kingbird' product to Ayayai occur 25% in year 1, 25% in year 2, 15% in year 3, and 35% in year 4. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Interest Expense Discount on Notes Payable (To record interest expense) Unearned Sales Revenue Sales Revenue (TO record sales of 1st year) Debit Credit On January 1, 2017, Kingbird Inc. borrowed and received $200,000 from a major customer, Ayayai Corp. The debt is evidenced by a zero-interest-bearing note due in 4 years. Kingbird, as consideration for the zero-interest-bearing feature of the note, agrees that it will supply inventory to Ayayai for the loan period at a below-market price. The appropriate rate at which to impute interest is 7%. Prepare the journal entries to record any adjusting entries needed at December 31, 2017. Assume that the sales of Kingbird' product to Ayayai occur 25% in year 1, 25% in year 2, 15% in year 3, and 35% in year 4. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Interest Expense Discount on Notes Payable (To record interest expense) Unearned Sales Revenue Sales Revenue (TO record sales of 1st year) Debit Credit
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Below are the required journal entries Date 20171231 Date 20171231 Account Interest Exp... View the full answer
Related Book For
Advanced Accounting
ISBN: 978-1259444951
13th edition
Authors: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupni
Posted Date:
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