Equestrain Roads accepted a customer's $50,000 zero-interest-bearing six-month note in a sales transaction.The product sold normally sells for $46,000.If the sale was made on June 30, how much interest revenue from this transaction would be recorded for the year ending December 31?

Question

Quizplus · Accepted Answer

Since the note is zero-interest-bearing, there is no interest revenue to be recorded over the six-month period. However, since the sale was made on June 30, half of the revenue ($23,000) would be recognized in the current year ending December 31. Therefore, the interest revenue to be recorded would be the difference between the sale price and the note amount, which is $4,000 ($50,000 - $46,000).

Equestrain Roads Accepted a Customer's $50,000 Zero-Interest-Bearing Six-Month Note in a Sales