On December 31, 2018, Perly Company performed environmental consulting services for Brocade Corporation. Brocade was short of cash, so Perly agreed to accept a $300,000 noninterest-bearing note due on December 31, 2020. Brocade is somewhat of a credit risk and Perly determines that 10% is an appropriate market rate. Use the present value of $1 table below:
$$\begin{array} { | c | c | c | }
\hline \text { Periods } & 10 \% & 11 \% \
\hline 1 & .90909 & .90090 \
\hline 2 & .82645 & .81162 \
\hline 3 & .75132 & .73119 \
\hline 4 & .68301 & .65873 \
\hline
\end{array}$$
a. Prepare the journal entry to record the receipt of the note on December 31, 2018.
b. Prepare the adjusting entry on December 31, 2019. Use two decimal places.
c. Prepare the journal entry to record the receipt of the payment on December 31, 2020.

Question

On December 31, 2018, Perly Company performed environmental consulting services for Brocade Corporation. Brocade was short of cash, so Perly agreed to accept a $300,000 noninterest-bearing note due on December 31, 2020. Brocade is somewhat of a credit risk and Perly determines that 10% is an appropriate market rate. Use the present value of $1 table below:
 $$\begin{array} { | c | c | c | } 
\hline \text { Periods } & 10 \% & 11 \% \
\hline 1 & .90909 & .90090 \
\hline 2 & .82645 & .81162 \
\hline 3 & .75132 & .73119 \
\hline 4 & .68301 & .65873 \
\hline
\end{array}$$
 a. Prepare the journal entry to record the receipt of the note on December 31, 2018.
b. Prepare the adjusting entry on December 31, 2019. Use two decimal places.
c. Prepare the journal entry to record the receipt of the payment on December 31, 2020.

Quizplus · Accepted Answer

The Answer of On December 31, 2018, Perly Company performed environmental consulting services for Brocade Corporation. Brocade was short of cash, so Perly agreed to accept a $300,000 noninterest-bearing note due on December 31, 2020. Brocade is somewhat of a credit risk and Perly determines that 10% is an appropriate market rate. Use the present value of $1 table below:
 $$\begin{array} { | c | c | c | } 
\hline \text { Periods } & 10 \% & 11 \% \
\hline 1 & .90909 & .90090 \
\hline 2 & .82645 & .81162 \
\hline 3 & .75132 & .73119 \
\hline 4 & .68301 & .65873 \
\hline
\end{array}$$
 a. Prepare the journal entry to record the receipt of the note on December 31, 2018.
b. Prepare the adjusting entry on December 31, 2019. Use two decimal places.
c. Prepare the journal entry to record the receipt of the payment on December 31, 2020.

On December 31, 2018, Perly Company Performed Environmental Consulting Services