On January 1, 2009, Glanville Company sold goods to Otter Corporation. Otter signed a noninterest-bearing note requiring payment of $15,000 annually for six years. The first payment was made on January 1, 2009. The prevailing rate of interest for this type of note at date of issuance was 8%. Glanville should record the sales revenue in January 2009 of:

Question

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The sales revenue should be the present value of the six payments, which is $74,891. This is calculated by multiplying the annual payment of $15,000 by the present value annuity factor for six periods at 8%, which is 4.99271.

On January 1, 2009, Glanville Company Sold Goods to Otter