Question

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Exercise 14-18 On January 1, 2017, Crane Co. borrowed and received $488,000 from a major customer evidenced by a zero-interest-bearing note due in 5 years. As consideration for the zero-interest-bearing feature, Crane agrees to supply the customer's inventory needs for the loan period at lower than the market price. The appropriate rate at which to impute interest is 10%. (a) Prepare the journal entry to record the initial transaction on January 1, 2017. (b) Prepare the journal entry to record any adjusting entries needed at December 31, 2017. Assume that the sales of Crane's product to this customer occur evenly over the 5-year period. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971. If no entry is required, select "No Entry" for the account titles and enter o for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) No. Date Account Titles and Explanation Debit Credit (a) January 1, 2017 (b) December 31, 2017 (To record Interest Expense) December 31, 2017

Answer 1

Borrowed su eso00 ( it is a beanig note For 6yeeers Bero tnterest mpukd rata Parosent valuie of 488000 Lot .5 as ueS000 n 101)S $3030 10 Jan 1,201t Cash Discaunt on notes No tes 30 3010 স payable 184110 $ u88000 iog ra Deam ber 31,20lt Interest Expene Discount on nots $36998 836 998 गफीळ्ये 3699) 84990 5ars Decambes 312017 Notes payabla Sale of goods ६१न600 $97600 CGoods ae sold againet oles payabe pes age maat) (488000 51ears=9600