Khajepour
Corporation issued a $140,000, four-year, zero-interest-bearing note to
Saccomanno Corp. on January 1, 2011, and received $140,000 cash. In addition,
the company agreed to sell merchandise to Saccomanno for an amount less than
the regular selling price over the four-year period. The market interest rate
for similar notes is 8%. Prepare Khajepour’s January 1 journal entry.
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Cash ...............................................................................................
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140,000
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Notes Payable.....................................................................
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102,904
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Unearned Revenue...........................................................
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37,096
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[$140,000 – ($140,000 X .73503 = $102,904)]
= $37,096
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Excel formula: =PV(rate,nper,pmt,fv,type)
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Using a financial calculator:
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|||
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PV
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?
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Yields $
102,904
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I
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8%
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N
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4
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PMT
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0
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FV
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$ (140,000)
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Type
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0
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