Interest revenue, Financial Accounting

Assignment Help:

Interest revenue:

At the end of 2012, a manufacturer sells machinery to a customer for $90,000. $30,000 is paid immediately, and the customer signs a promissory note for the remainder. The note specifies that another $30,000 is to be paid at the end of 2013, and the final $30,000 is to be paid at the end of 2014.

A rate of 6% per year would normally be charged for this type of financing. However, the manufacturer provides free financing; no interest is charged.

a.   What amount should be recorded for the note receivable when this sale is made?

b.   How much sales revenue should be recognized in 2012?

c.   How much interest revenue should the manufacturer recognize in 2013?

d.   How much of the 2013 payment will be applied towards reducing the principal amount of the note receivable?

e.   How much interest revenue should the manufacturer recognize in 2014?


Related Discussions:- Interest revenue

Objectives of time value of money, After going through this section, you mu...

After going through this section, you must be capable to: -          Identify the time value of money; -          Know what gives money its time value; -          Identify

Revenue expenditures, Revenue expenditures 1. Are additional costs of plant...

Revenue expenditures 1. Are additional costs of plant assets that do not materially increase the asset's life or its productive capabilities 2. Are known as balance sheet expenditu

Repayment of principal, a) Your company is planning to take $1,750,000 on a...

a) Your company is planning to take $1,750,000 on a 3-year, 10%, annual payment, fully amortized term loan. What fraction of the payment made at the end of the second year will sho

Absorbed cost, These are the indirect costs that are related with manufactu...

These are the indirect costs that are related with manufacturing. Absorbed costs involve expenses like insurance, or property taxes for the building in which the production process

Disclaimer of onerous property-bankruptcy, DISCLAIMER OF ONEROUS PROPERTY ...

DISCLAIMER OF ONEROUS PROPERTY 1) Effect of disclaimer The trustee may disclaim onerous property consisting of: Land burdened with onerous covenants; Stocks and shares;

Consolidating Accounting, I have an assignment in consolidation accounting ...

I have an assignment in consolidation accounting and would like to know if you can assist me in doing the assignment for me. I am doing BA in Accounting . Please let me know. Re

Interest is deductible on schedule a, Heather & Terry have a mortgage on th...

Heather & Terry have a mortgage on their primary residence of $750,000 and a mortgage on their vacation home of $410,000. In 2013, they incurred $46,400 of mortgage interest expens

Illustration of change in profit sharing ratio, Illustration of change in p...

Illustration of change in profit sharing ratio A, B and C have been trading as equal partners having capital contributions of £400,000, £300,000 and £200,000 respectively. They

Explain the accounting treatment , This is a research case.  You must compl...

This is a research case.  You must complete this assignment INDIVIDUALLY.  This means no help from other students.  You may consult Dr. Eldridge while you are working on this case.

The petition-bankruptcy, THE PETITION Petition by debtor : If the de...

THE PETITION Petition by debtor : If the debtor presents his own petition, a receiving order is made at once without a court hearing and an adjudication order may also be ma

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd