Problem 2: Notes Receivable (9 marks)
On January 1, 2018, London Inc. sold $50,000 worth of goods to Sarnia Ltd. It was determined that
Sarnia Inc. had poor credit and signed a three year, zero-interest bearing note. London can borrow
money at an interest rate of 1.5%
Assume both companies follow IFRS (the effective-interest method of amortization).
Requirements
A) Calculate the present value of the note receivable. Show your work for part marks.
B)Prepare the following entries for London Inc.:
1- Provide the journal entry required on January 1, 2018.
Date	Description	Dr	Cr
2- Provide the journal entry required on December 31, 2018.
Date	Description	Dr	Cr
3- Provide the journal entry required on December 31, 2019.
Date	Description	Dr	Cr
4- Provide the journal entry required on December 31, 2020.
Date	Description	Dr	Cr