Note issued for non-cash consideration
On July 1, 2020, Modesto Holdings Ltd. issued a $ 50,000 face value note due June 30, 2023 with a stated interest rate of 4% to Modern Consultants in return for consulting services provided in 2020. The value of the consulting services is not readily determinable and the note is not readily marketable. On the basis of a credit analysis, a reasonable imputed interest rate would be 12%.
Instructions
Prepare the journal entry to record the issuance of the note by Modesto. Use your calculator and round values to the nearest dollar.

Question

Quizplus · Accepted Answer

The Answer of Note issued for non-cash consideration
On July 1, 2020, Modesto Holdings Ltd. issued a $ 50,000 face value note due June 30, 2023 with a stated interest rate of 4% to Modern Consultants in return for consulting services provided in 2020. The value of the consulting services is not readily determinable and the note is not readily marketable. On the basis of a credit analysis, a reasonable imputed interest rate would be 12%.
Instructions
Prepare the journal entry to record the issuance of the note by Modesto. Use your calculator and round values to the nearest dollar.

Note Issued for Non-Cash Consideration