Imputed interest on non-interest-bearing

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On December 31, 2011, Fenton Company sold equipment to Denver, Inc., accepting a $275,000 noninterest-bearing note receivable in full payment on December 31, 2014. Denver, Inc., normally pays 12% for its borrowed funds. The equipment is carried in Fenton's perpetual inventory records at 65% of its cash selling price.

1) Prepare Fenton's journal entries to record the sale on December 31, 2011.

2) Prepare Fenton's journal entry on December 31, 2012, necessitated by this transaction. (Hint: Prepare an amortization schedule for the loan.)

3) Show Fenton's balance sheet presentation of Denber's note at December 31, 2012.

Reference no: EM1356725

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