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Arctic Cat sold Seneca Motor Sports a shipment of snowmobiles. The snowmobiles were delivered on January 1, 2024, and Arctic received a note from Seneca indicating that Seneca will pay Arctic $32,500 on a future date. Unless informed otherwise, assume that Arctic views the time value of money component of this arrangement to be significant and that the relevant interest rate is 10%.

Arctic Cat sold Seneca Motor Sports a shipment of snowmobiles. The snowmobiles were delivered on January 1, 2024, and Arctic received a note from Seneca indicating that Seneca will pay Arctic $32,500 on a future date. Unless informed otherwise, assume that Arctic views the time value of money component of this arrangement to be significant and that the relevant interest rate is 10%.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Arctic Cat sold Seneca Motor Sports a shipment of snowmobiles. The snowmobiles were delivered on January 1, 2024, and Arctic received a note from Seneca indicating that Seneca will pay Arctic $32,500 on a future date. Unless informed otherwise, assume that Arctic views the time value of money component of this arrangement to be significant and that the relevant interest rate is 10%. Required: 1. Assume the note indicates that Seneca is to pay Arctic the $32,500 due on the note on December 31, 2024. Prepare the journal entry for Arctic to record the sale on January 1, 2024. 2. Assume the same facts as in requirement 1, and prepare the journal entry for Arctic to record collection of the payment on December 31, 2024. 3. Assume instead that Seneca is to pay Arctic the $32,500 due on the note on December 31, 2025. Prepare the journal entry for Arctic to record the sale on January 1, 2024. 4. Assume instead that Arctic does not view the time value of money component of this arrangement to be significant and that the note indicates that Seneca is to pay Arctic the $32,500 due on the note on December 31, 2024. Prepare the journal entry for Arctic to record the sale on January 1, 2024. Note: Use tables, Excel, or a financial calculator. If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount. (EV of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) No 1 Date January 01, 2024 Notes receivable Answer is not complete. General Journal Debit Credit 32,500 Discount on notes receivable Sales revenue 2 December 31, 202 Cash Discount on notes receivable Notes receivable 000 000
Transcribed Image Text:Arctic Cat sold Seneca Motor Sports a shipment of snowmobiles. The snowmobiles were delivered on January 1, 2024, and Arctic received a note from Seneca indicating that Seneca will pay Arctic $32,500 on a future date. Unless informed otherwise, assume that Arctic views the time value of money component of this arrangement to be significant and that the relevant interest rate is 10%. Required: 1. Assume the note indicates that Seneca is to pay Arctic the $32,500 due on the note on December 31, 2024. Prepare the journal entry for Arctic to record the sale on January 1, 2024. 2. Assume the same facts as in requirement 1, and prepare the journal entry for Arctic to record collection of the payment on December 31, 2024. 3. Assume instead that Seneca is to pay Arctic the $32,500 due on the note on December 31, 2025. Prepare the journal entry for Arctic to record the sale on January 1, 2024. 4. Assume instead that Arctic does not view the time value of money component of this arrangement to be significant and that the note indicates that Seneca is to pay Arctic the $32,500 due on the note on December 31, 2024. Prepare the journal entry for Arctic to record the sale on January 1, 2024. Note: Use tables, Excel, or a financial calculator. If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount. (EV of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) No 1 Date January 01, 2024 Notes receivable Answer is not complete. General Journal Debit Credit 32,500 Discount on notes receivable Sales revenue 2 December 31, 202 Cash Discount on notes receivable Notes receivable 000 000
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