Question

Problem 18-8 Presented below are two independent revenue arrangements for Bonita Company. Respond to the requirements related to each revenue arrangement. Bonita sells 3D printer systems. Recently, Bonita provided a special promotion of zero-interest financing for 2 years on any new 3D printer system. Assume that Bonita sells Lyle Cartright a 3D system, receiving a $5,700 zero-interest-bearing note on January 1, 2017. The cost of the 3D printer system is $4,560. Bonita imputes a 6% interest rate on this zero-interest note transaction. Prepare the journal entry to record the sale on January 1, 2017, and compute the total amount of revenue to be recognized in 2017. (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)

Answer 1

Solution:

Sale value of printer = Present value of note = $5,700 * PV factor at 6% for 2nd period

= $5,700 * 0.89 = $5,073

Journal Entries - Bonita
Date	Particulars	Debit	Credit
1-Jan-17	Note receivables Dr	$5,700.00
	To Sales revenue		$5,073.00
	To Discount on note receivables		$627.00
	(To record sales revenue)
1-Jan-17	Cost of goods sold Dr	$4,560.00
	To Inventory		$4,560.00
	(To record COGS)