Wildhorse Company sells land with a book value of $203125 to Windsor Corp. in exchange for a $325000 zero-interest-bearing note payable in 3 years. The market rate of interest for a transaction of this nature for Windsor is 8%. The present value of 1 at 8% for 3 years is 0.7938 and the present value of an ordinary annuity of 1 at 8% for 3 years is 2.5771.

 If the sale occurred on January 1 and the fiscal year ends on December 31, what will be the adjusting journal entry for interest revenue at the end of the first year using the effective-interest method closest?

Answer rating: 100% (QA)

To calculate the interest revenue for the first year using the effectiveinterest method we need to d... View the full answer