Question

(a) Cullumber sells 3D printer systems. Recently, Cullumber provided a special promotion of zero-interest financing for 2 years on any new 3D printer system. Assume that Cullumber sells Lyle Cartright a 3D system, receiving a $4,000 zero-interest-bearing note on January 1, 2020. The cost of the 3D printer system is $3,200. Cullumber imputes a 6% interest rate on this zero- interest note transaction. Prepare the journal entry to record the sale on January 1, 2020, and compute the total amount of revenue to be recognized in 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. 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.) Account Titles and Explanation Debit Credit (To record sales) (To record cost of goods sold) e Textbook and Media List of Accounts

Answer 1

С D E Credit Debit $4,000 $440 ($4,000-3560) $3,560 ($4,000*0.8899) A B 29 30 Date Account Titles and Explanations 31 01-Jan-20 Notes receivable 32 Discount on notes receivable 33 Sales revenue ($4,000* PVIF for 2 years at 6%) 34 (To record Sales) 35 36 01-Jan-20Cost of goods sold 37 Inventory 38 (To record cost of goods sold) 39 40 Sales revenue 41 Less: Interest on notes (3560*6%) 42 Income recognized $3,200 $3,200 $ 3,560 $ 214 $ 3,346 43