Question

Prepare all Journal Entries related to the following note of Company for the 2019 fiscal year...

Prepare all Journal Entries related to the following note of Company for the 2019 fiscal year which ends Dec. 31, 2019.

NOTE C: On April 1, 2019, Company finished consultation services and accepted in exchange a promissory note with a face value of $100,000, a due date of April 1, 2021, and no stated or coupon rate. The 11% interest is a realistic interest rate (market rate)for a note of this type.

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Answer #1
Date Account Titles and Explanation Debit Credit
2019
April 1 Note Receivable      1,00,000
Discount on Note Receivable     26,881
Consulting Services Revenue     73,119
(100,000 x 0.73119)
Dec 31 Discount on Note Receivable (73,119 x 11% x 9/12)          6,032
Interest Revenue       6,032
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