Montana Minerals sold coal to Beta Electric, receiving a six-month, noninterest-bearing note for $200,000. The implied discount rate on the note is 8% per annum. Montana uses a periodic inventory system, and views the financing component of this transaction to be significant.
Required:
1. Prepare the journal entry to record the sale.
2. Compute the effective rate of interest.

Question

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The Answer of Montana Minerals sold coal to Beta Electric, receiving a six-month, noninterest-bearing note for $200,000. The implied discount rate on the note is 8% per annum. Montana uses a periodic inventory system, and views the financing component of this transaction to be significant.
Required:
1. Prepare the journal entry to record the sale.
2. Compute the effective rate of interest.

Montana Minerals Sold Coal to Beta Electric, Receiving a Six-Month