On January 1, 2017, Oldham Company sold goods to Windall Company in exchange for a 3-year, non-interest- bearing note with a face value of $30,000. If Oldham entered into a separate financing transaction with Windall, an appropriate interest rate would be 10%; therefore, the transaction price would be $22,540. Which of the following statements is true about the journal entry that records the transaction when Oldham delivers the goods to Windall on January 1, 2017?
A) Debit Note Receivable for $22,540
B) Credit Sales Revenue $22,540
C) Debit Discount on Note Receivable $7,460
D) Credit Interest Revenue $7,460

Question

Quizplus · Accepted Answer

The sales revenue should be recorded at the present value of the note, which is $22,540, reflecting the fair value of the goods sold.

On January 1, 2017, Oldham Company Sold Goods to Windall