Question: Problem # 3 (Notes Receivable with Unrealistic Interest Rate) On December 31, 2015, Tran Co. performed environmental consulting services for Hayden Co. Hayden was short

Problem # 3 (Notes Receivable with Unrealistic Interest Rate) On December 31, 2015, Tran Co. performed environmental consulting services for Hayden Co. Hayden was short of cash, and Tran Co. agreed to accept a $100,000 zero-interest-bearing note due December 31, 2017, as payment in full. Hayden is somewhat of a credit risk and typically borrows funds at a rate of 15%. Tran is much more creditworthy and has various lines of credit at 8%.

Instructions

1. Prepare the journal entry to record the transaction of December 31, 2015, for Tran Co.

2. Assuming Tran Co.s fiscal year-end is December 31, prepare the journal entry for December 31, 2016.

3. Assuming Tran Co.s fiscal year-end is December 31, prepare the journal entry for December 31, 2017.

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