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Provide the journal entry to record Brewers sale of services

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Question - 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):

 

@4%

@9%

@11%

Future value of $1

1.26532

1.67710

1.87041

Present value of $1

0.79031

0.59627

0.53464

Future value of an ordinary annuity

6.63298

7.52334

7.91286

Present value of an ordinary annuity

5.24214

4.48592

4.23054

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. Please show all of your calculations. (Hint: amortize the).

Reference no: EM132488672

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