On January 1, 2017, Sage Hill Inc. borrowed and received $410,000 from a major customer, Cheyenne Corp. The debt is evidenced by a zero-interest-bearing note due in 4 years. Sage Hill, as consideration for the zero-interest-bearing feature of the note, agrees that it will supply inventory to Cheyenne for the loan period at a below-market price. The appropriate rate at which to impute interest is 7%. Prepare the journal entry to record the initial transaction on January 1, 2017.
On January 1, 2017, Sage Hill Inc. borrowed and received $410,000 from a major customer, Cheyenne Corp. The debt is evidenced by a zero-interest-bearing note due in 4 years. Sage Hill, as consideration for the zero-interest-bearing feature of the note, agrees that it will supply inventory to Cheyenne for the loan period at a below-market price. The appropriate rate at which to impute interest is 7%. Prepare the journal entry to record the initial transaction on January 1, 2017.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter13: Investments And Long-term Receivables
Section: Chapter Questions
Problem 15RE: On January 1, Kilgore Inc. accepts a 20,000 non-interest-bearing, 5-year note from Dieland Company...
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On January 1, 2017, Sage Hill Inc. borrowed and received $410,000 from a major customer, Cheyenne Corp. The debt is evidenced by a zero-interest-bearing note due in 4 years. Sage Hill, as consideration for the zero-interest-bearing feature of the note, agrees that it will supply inventory to Cheyenne for the loan period at a below-market price. The appropriate rate at which to impute interest is 7%.
Prepare the
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