Required: 

(a) Provide the journal entry to record Brewer's sale of services in exchange for the promissory note on 1/1/18. Please show all of your calculations.

(b) Record the adjusting journal entry on 12/31/18 by Brewer Inc.

Transcribed Image Text:

On January 1, 2018, Brewer Inc. sold services worth $800,000 to their customer Army Co. and accepted a note as payment in full. The promissory note is a 6-year $800,000, zero-interest bearing note. Brewer is able to borrow currently at 9%, but Army Co. has only been able to borrow at 11%. The following interest factors may be of use in this problem (all for 6 periods): Future value of $1 Present value of $1 Future value of an ordinary annuity Present value of an ordinary annuity @4% 1.26532 0.79031 6.63298 5.24214 @9% @11% 1.67710 1.87041 0.59627 0.53464 7.52334 7.91286 4.48592 4.23054 On January 1, 2018, Brewer Inc. sold services worth $800,000 to their customer Army Co. and accepted a note as payment in full. The promissory note is a 6-year $800,000, zero-interest bearing note. Brewer is able to borrow currently at 9%, but Army Co. has only been able to borrow at 11%. The following interest factors may be of use in this problem (all for 6 periods): Future value of $1 Present value of $1 Future value of an ordinary annuity Present value of an ordinary annuity @4% 1.26532 0.79031 6.63298 5.24214 @9% @11% 1.67710 1.87041 0.59627 0.53464 7.52334 7.91286 4.48592 4.23054

Answer rating: 100% (QA)

a To record Brewer Incs sale of services in exchange for the promissory note on 1118 The ... View the full answer