Question

1. Adams Company sells goods to Daniels Company on March 18, 2018. The goods were purchased in exchange for a note with a face value of $22,000. The total payment of the note was due in one year. The fair value of the goods at the date of sale is $18,500. In addition, the total cost to make the goods was $10,200. Prepare the journal entries to record this transaction on March 18, 2018.

Answer 1

Solution:

Journal Entries - Adams Company
Date	Particulars	Debit	Credit
18-Mar-18	Note receivables Dr	$22,000.00
	To Sales revenue		$18,500.00
	To Discount on note receivables		$3,500.00
	(To record sales revenue)
18-Mar-18	Cost of goods sold Dr	$10,200.00
	To Inventory		$10,200.00
	(To record cost of goods sold)