Tokyo Imports sold merchandise to Tall-Mart, receiving a six-month, noninterest-bearing note for $100,000. The implied discount rate on the note is 10% per annum. Tokyo uses a periodic inventory system, and views the financing component of this transaction to be significant.
Required:
1. Prepare the journal entry to record the sale.
2. Compute the effective rate of interest.

Question

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The Answer of Tokyo Imports sold merchandise to Tall-Mart, receiving a six-month, noninterest-bearing note for $100,000. The implied discount rate on the note is 10% per annum. Tokyo uses a periodic inventory system, and views the financing component of this transaction to be significant.
Required:
1. Prepare the journal entry to record the sale.
2. Compute the effective rate of interest.

Tokyo Imports Sold Merchandise to Tall-Mart, Receiving a Six-Month, Noninterest-Bearing