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Prepare all journal entries required for the note for John

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Question - On May 31, 2021, John Deere sold a tractor to Dirtco in exchange for a two year, $500,000 non-interest bearing note.

Dirtco will make a $200,000 payment on May 31, 2022, and pay a lump sum payment of $300,000 on May 31, 2023. John Deere's year-end is December 31.

Assume that your year-end adjusting entries are reversed. Do not show the reversal entry. If you do not know what a reversing journal entry is, it is important that you find out before doing this question. Dirtco would normally pay an interest rate of 8%.

Required - Prepare all journal entries required for the note for John Deere, from the initial sale to repayment. Count exact days for the year-end interest revenue adjustment. Calculate and journalize amounts to the nearest dollar. (Hint: Using the cash flow keys on your financial calculator is the easiest way to calculate the present value of this note.)

Reference no: EM133149410

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