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Prepare journal entries to record transaction on january

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Question - On January 2, 2020, Metlock Inc. sells goods to Ivanhoe Company in exchange for a zero-interest-bearing note with a face value of $7,480, with payment due in 12 months. The fair value of the goods at the date of sale is $6,800 (cost $5,700). Assume that the company chooses to reflect the interest component.

Required -

1. Prepare the journal entries to record this transaction on January 2, 2020.

2. How much total revenue should be recognized in 2020?

3. Using Excel or a financial calculator, determine the interest rate that will be earned by Metlock.

Reference no: EM133067661

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