Question

Splish sells 3D printer systems. Recently, Splish provided a special promotion of zero-interest financing for 2 years on any new 3D printer system. Assume that Splish sells Lyle Cartright a 3D system, receiving a $4,600 zero-interest-bearing note on January 1, 2017. The cost of the 3D printer system is $3,680. Splish imputes a 6% interest rate on this zero-interest note transaction. Prepare the journal entry to record the sale on January 1, 2017, and compute the total amount of revenue to be recognized in 2017.

Answer 1

Answer:

Explanation:

Sale value of printer = Present value of note = $4,094

Journal Entries

Date Particulars

1-Jan-17

Dr    Note receivables  $4,600.00  

     Cr    Sales revenue  $4,094.00

     Cr     Discount on note receivables    $506 .00

(To record sales revenue)  

1-Jan-17

Dr Cost of goods sold  $3,680.00  

   Cr  To Inventory             $3,680.00

(To record COGS)