On September 30, 2019, Rolen Machinery Co. sold a machine and accepted the customer’s zero-interest-bearing note. Rolen normally makes sales on a cash basis. Since the machine was unique, its sales price was not determinable using Rolen’s normal pricing practices. After receiving the first of two equal annual installments on September 30, 2020, Rolen immediately sold the note with recourse. On October 9, 2021, Rolen received notice that the note was dishonored, and it paid all amounts due. At all times prior to default, the note was reasonably expected to be paid in full. Instructions 1. How should Rolen account for the effects of the note being dishonored?
On September 30, 2019, Rolen Machinery Co. sold a machine and accepted the customer’s zero-interest-bearing note. Rolen normally makes sales on a cash basis. Since the machine was unique, its sales price was not determinable using Rolen’s normal pricing practices. After receiving the first of two equal annual installments on September 30, 2020, Rolen immediately sold the note with recourse. On October 9, 2021, Rolen received notice that the note was dishonored, and it paid all amounts due. At all times prior to default, the note was reasonably expected to be paid in full. Instructions 1. How should Rolen account for the effects of the note being dishonored?
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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Question
On September 30, 2019, Rolen Machinery Co. sold a machine and accepted the customer’s zero-interest-bearing note. Rolen normally makes sales on a cash basis. Since the machine was unique, its sales price was not determinable using Rolen’s normal pricing practices.
After receiving the first of two equal annual installments on September 30, 2020, Rolen immediately sold the note with recourse. On October 9, 2021, Rolen received notice that the note was dishonored, and it paid all amounts due. At all times prior to default, the note was reasonably expected to be paid in full.
Instructions
1. How should Rolen account for the effects of the note being dishonored?
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