On January 2, 2020, Tamarisk Inc. sells goods to Carla Vista Company in exchange for a zero-interest-bearing note with a face value of $7,920, with payment due in 12 months. The fair value of the goods at the date of sale is $7,200 (cost $6,500). Assume that the company chooses to reflect the interest component.How much total revenue should be recognized in 2020?determine the interest rate that will be earned by Tamarisk. Prepare the journal entries to record this transaction on January 2, 2020. (Credit account titles are automatically indented whenthe amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for theamounts.)DateAccount Titles and ExplanationDebitCreditJanuary2, 2020(To record sales)January2, 2020(To record cost of goods sold)

Interest = Face value of bonds - Fair value of goods = $7,920 - $7,200 = $720

Answered: On January 2, 2020, Tamarisk Inc. sells…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter3: Analyzing And Recording Transactions

Section: Chapter Questions

Problem 10PB: Prepare journal entries to record the following transactions. Create a T-account for Accounts...

See similar textbooks

Related questions

Question

On January 2, 2020, Tamarisk Inc. sells goods to Carla Vista Company in exchange for a zero-interest-bearing note with a face value of $7,920, with payment due in 12 months. The fair value of the goods at the date of sale is $7,200 (cost $6,500). Assume that the company chooses to reflect the interest component.

How much total revenue should be recognized in 2020?

determine the interest rate that will be earned by Tamarisk.

Prepare the journal entries to record this transaction on January 2, 2020. (Credit account titles are automatically indented when
the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the
amounts.)
Date
Account Titles and Explanation
Debit
Credit
January
2, 2020
(To record sales)
January
2, 2020
(To record cost of goods sold)

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions