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

Receiving order, RECEIVING ORDER It includes five main important points...

RECEIVING ORDER It includes five main important points as follows: Effect of receiving order: The consequences of the making of the receiving order are:The debtor retain

Absorption costing, It is a managerial accounting cost method of expensing ...

It is a managerial accounting cost method of expensing all costs related with producing a particular product. Absorption costing utilizes the total direct costs and overhead costs

Relevance to investors, (a) IFRS 8 Operating segments requires that segment...

(a) IFRS 8 Operating segments requires that segmental information be provided by listed entities. Clearly FGH is looking to list and hence IFRS 8 will be applicable. The disclosure

Illustration of admissions and retirements, Illustration of Admissions and ...

Illustration of Admissions and Retirements Jim and Ken have been trading in partnership for several, sharing profits or losses equally after allowing for interest on their capi

Case law & study, Bakers Bagels LLC produces and sells 20 types of bagels b...

Bakers Bagels LLC produces and sells 20 types of bagels by the dozen. Bagels are priced at $6.00 per dozen (or $0.50 each) and cost $.020 per unit to produce. The company is consid

Absorption costing, Absorption costing is a cost accounting method that ...

Absorption costing is a cost accounting method that tries to charge all direct costs and all production costs of an organization to specific units of pr

Prepare a journal entry to record, On January 1, a company issued and sold ...

On January 1, a company issued and sold a $400,000, 7%, 10-year bong payable, and recieved proceeds of $396,000. Interest is payable each June 30 and December 31. The company uses

The deficiency account-bankruptcy accounts, The Deficiency Account Pur...

The Deficiency Account Purpose of deficiency account : The purpose of the deficiency account is to explain the deficit shown on the statement of affairs. The deficiency acc

Red herring, Red Herring -‘Pre-release' PROSPECTUS offering. An announcemen...

Red Herring -‘Pre-release' PROSPECTUS offering. An announcement of a future issuance of SECURITIES, given restricted circulation during waiting period of 20 days or other specified

Financial accounting, Financial Accounting An accounting technique that...

Financial Accounting An accounting technique that records, interprets, and reports the historical cost transaction of an organization. An organization records these transaction

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