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

Which is not true of a corporation, Q. Which of the following is not true o...

Q. Which of the following is not true of a corporation? a. It may buy, own, and sell property. b. It may sue and be sued. c. The acts of its owners bind the corporation. d. It may

Money, if you inherited 45,000 today and invested all of it in a security t...

if you inherited 45,000 today and invested all of it in a security that paid a 7 percent rate of return how much would you have in 25 years

What are the advantage of limited liability, What are the Advantage of limi...

What are the Advantage of limited liability Advantage of limited liability, though, imposes certain obligations on such companies. To start up a limited company, documents of i

In recent years Morten Ltd, in recent years Morten Ltd, a company that manu...

in recent years Morten Ltd, a company that manufactures and markets a range of pharmaceutical products.

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

Vat, recommendation regarding the current south African vat system

recommendation regarding the current south African vat system

Best estimate for morningside''s cost of equity, Morningside nursing Home, ...

Morningside nursing Home, a not-for-profit corporation, is estimating its corporate cost of capital.  Its tax-exempt debt currently requires an interest rate of 6.2 percent and its

Treatment of cash flow - gaap & fasb, The appropriate treatment of Cash flo...

The appropriate treatment of Cash flow in respect of the following items as per US GAAP & FASB - (230-10)  1. Receipt of Insurance settlement proceeds of $2 mill. From an intern

Calculate free cash flow to equity, (a)  In order to obtain free cash flow...

(a)  In order to obtain free cash flow to equity (FCFE), the two adjustments that Shaar must make to cash flow from operations (CFO) are  i.   CFO does not consider the inves

What is the expected interest rate, You are the Genesis accountant and have...

You are the Genesis accountant and have taken a class recently in financing. You agree to prepare a PowerPoint presentation of approximately 6-8 minutes using the examples and info

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