Question

On December 31, 2020, Kingbird Inc. rendered services to Beghun Corporation at an agreed price of $118,390, accepting $45,800 down and agreeing to accept the balance in four equal installments of $22,900 receivable each December 31. An assumed interest rate of 10% is imputed.

Answer 1

Solution 1:

Kingbird Inc. December 31, 2020
Schedule of Note Discount Amortization
Date	Cash received	Interest revenue / Discount amortized	Decrease in carrying value	Carrying Amount of Note
31-Dec-20				$72,590
31-Dec-21	$22,900.00	$7,259	$15,641	$56,949
31-Dec-22	$22,900.00	$//img.homeworklib.com/questions/6afe9320-7056-11ea-8ad9-f7e0a287a461.gif?x-oss-process=image/resize,w_560$ $5,695	$17,205	$//img.homeworklib.com/questions/6afe9320-7056-11ea-8ad9-f7e0a287a461.gif?x-oss-process=image/resize,w_560$ $39,744
31-Dec-23	$22,900.00	$3,974	$18,926	$20,818
31-Dec-24	$22,900.00	$2,082	$20,818	$0

Solution 2:

Date	Account Titles and Explanation	Debit	Credit
31-Dec-20	$//img.homeworklib.com/questions/6afe9320-7056-11ea-8ad9-f7e0a287a461.gif?x-oss-process=image/resize,w_560$ Cash Dr	$45,800.00
	Note receivables Dr	$91,600.00
	To Service revenue		$118,390.00
	To Discount on note receivables		$19,010.00
	(To record service revenue)

Solution 3:

Date	Account Titles and Explanation	Debit	Credit
31-Dec-21	$//img.homeworklib.com/questions/6afe9320-7056-11ea-8ad9-f7e0a287a461.gif?x-oss-process=image/resize,w_560$ Cash Dr	$22,900.00
	To Note receivables		$22,900.00
	(To record installment received)
31-Dec-21	Discount on note receivables Dr	$7,259.00
	To Interest revenue		$7,259.00
	(To record interest revenue)