At the beginning of 2017, Gannon Company received a three-year zero-interest-bearing $1,000 trade note.The market rate for equivalent notes was 8% at that time.Gannon reported this note as a $1,000 trade note receivable on its 2017 year-end statement of financial position and $1,000 as sales revenue for 2017.What effect did this accounting for the note have on Gannon's net earnings for 2017, 2018, 2019, and its retained earnings at the end of 2019, respectively?

Question

Quizplus · Accepted Answer

The Answer of At the beginning of 2017, Gannon Company received a three-year zero-interest-bearing $1,000 trade note.The market rate for equivalent notes was 8% at that time.Gannon reported this note as a $1,000 trade note receivable on its 2017 year-end statement of financial position and $1,000 as sales revenue for 2017.What effect did this accounting for the note have on Gannon's net earnings for 2017, 2018, 2019, and its retained earnings at the end of 2019, respectively?

At the Beginning of 2017, Gannon Company Received a Three-Year