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on january 1, 2018 Happy tubs sold a hot tube to monica receiving a two-year noninterest...

on january 1, 2018 Happy tubs sold a hot tube to monica receiving a two-year noninterest bearing note in exchange for a hot tub that normally sells for $8,000. The note is fo an amount that achieves an effectve interest rate of 10% per year required .

Prepare the journal entry to recordthe sale

Prepare any adjusting entry neccessary on December 31,2018

Prepare any adjusting entry neccessary on December 31,2019

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Answer #1
01-Jan-18 Notes receivable 9680
             Discount on notes receivable 1680
             Sales revenue 8000
31-Dec-18 Discount on notes receivable 800 (8000*10%)
              Interest revenue 800
31-Dec-19 Discount on notes receivable 880 (8800*10%)
              Interest revenue 880
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