On February 1, 2021, Stealth Trucks sold a diesel rig to Kansas Transports for $250,000, receiving a $50,000 down payment and a 12- month, 10% note for the balance. Principal and interest are due at maturity, and the 10% interest rate reflected the market rate of interest at the time of sale. On August 1, 2021, Kansas Transports discounted the note without recourse at the First South Bank at 12% interest. Required: Prepare all required journal entries at August 1 to recognize interest revenue and the discounting of the note. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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On February 1, 2021, Stealth Trucks sold a diesel rig to Kansas Transports for $250,000, receiving a $50,000 down payment and a 12-
month, 10% note for the balance. Principal and interest are due at maturity, and the 10% interest rate reflected the market rate of
interest at the time of sale. On August 1, 2021, Kansas Transports discounted the note without recourse at the First South Bank at 12%
interest.
Required:
Prepare all required journal entries at August 1 to recognize interest revenue and the discounting of the note. (If no entry is required
for a transaction/event, select "No journal entry required" in the first account field.)
Transcribed Image Text:On February 1, 2021, Stealth Trucks sold a diesel rig to Kansas Transports for $250,000, receiving a $50,000 down payment and a 12- month, 10% note for the balance. Principal and interest are due at maturity, and the 10% interest rate reflected the market rate of interest at the time of sale. On August 1, 2021, Kansas Transports discounted the note without recourse at the First South Bank at 12% interest. Required: Prepare all required journal entries at August 1 to recognize interest revenue and the discounting of the note. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
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