Interest earned on down payment, Cost Accounting

Assignment Help:

You sell a machine for $600,000. You allow the client to pay 1/3 at the time of the sale and 1/3 at the end of year one and 1/3 at the end of year two. The company earns 10% on assets. What value will you record the sale at?

Sales Price:	$ 600,000.00
Down Payment:	$ 200,000.00
Outstanding Balance at Start of Year 1:	$ 400,000.00
Outstanding Balance at Start of Year 2:	$ 200,000.00

0 interest earned Down Payment
10% Interest Earned on the remaining $400,000 for 1 Year	$40,000
10% Interest Earned on the remaining $200,000 for 1 Year	$20,000

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