On January 1, 2024, Ott Co. sold goods to Flynn Company. Flynn signed a zero-interest-bearing note requiring payment of $160,000 annually for seven years. The first payment was made on January 1, 2024. The prevailing rate of interest for this type of note at date of issuance was 10%. Information on present value factors is as follows: ?Period PresentValue of 1 at 10%? Present Value of Ordinary Annuity of 1 at 10% 6?.5645? 4.3553 7?.5132? 4.8684 Ott should record sales revenue in January 2024 of

The sales revenue will should be the present value of paying $160,000 annually for 7 years. This is an Annuity but one that is paid at the beginning of a period making it an Annuity due.

Present Value of Annuity Due = Payment * (Present value of Annuity Interest factor, rate, period) * ( 1 + rate)

Present Value of Annuity Due = Payment * (Present value of Annuity Interest factor, 10%, 7) * ( 1 + 10%)

= 160,000 * 4.8684 * 1.1

= $856,838.40