On January 2, 2020, Tamarisk Inc. sells goods to Carla Vista Company in exchange for a zero-interest-bearing note with a face value of $7,920, with payment due in 12 months. The fair value of the goods at the date of sale is $7,200 (cost $6,500). Assume that the company chooses to reflect the interest component.How much total revenue should be recognized in 2020?determine the interest rate that will be earned by Tamarisk. Prepare the journal entries to record this transaction on January 2, 2020. (Credit account titles are automatically indented whenthe amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for theamounts.)DateAccount Titles and ExplanationDebitCreditJanuary2, 2020(To record sales)January2, 2020(To record cost of goods sold)

Interest = Face value of bonds - Fair value of goods = $7,920 - $7,200 = $720

Answered: On January 2, 2020, Tamarisk Inc. sells…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On January 2, 2020, Tamarisk Inc. sells goods to Carla Vista Company in exchange for a zero-interest-bearing note with a face value of $7,920, with payment due in 12 months. The fair value of the goods at the date of sale is $7,200 (cost $6,500). Assume that the company chooses to reflect the interest component.

How much total revenue should be recognized in 2020?

determine the interest rate that will be earned by Tamarisk.

Prepare the journal entries to record this transaction on January 2, 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.)
Date
Account Titles and Explanation
Debit
Credit
January
2, 2020
(To record sales)
January
2, 2020
(To record cost of goods sold)

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