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Chapter 18: 9BE (page 1033)

On January 2, 2017, Adani Inc. sells goods to Geo Company in exchange for a zero-interest-bearing note with face value of \(11,000, with payment due in 12 months. The fair value of the goods at the date of sale is \)10,000 (cost $6,000). Prepare the journal entry to record this transaction on January 2, 2017. How much total revenue should be recognized in 2017?

Short Answer

Expert verified

Total revenue computed for Adani Inc. is $11,000.

Step by step solution

01

Meaning of Total Revenue

The value of total revenue of a company comes after multiplying the number of units sold and the price charged for one unit Ignoring a loss position in the business requires the company to earn total revenue more than the total cost.

02

Journal entries are as follows

Date

Particulars

Debit ($)

Credit ($)

January 2, 2017

Note receivables a/c Dr.

11,000

To Sales revenue a/c

10,000

To Discount on note receivables a/c

1,000

January 2, 2017

Cost of goods sold a/c Dr.

6,000

To Inventory a/c

6,000

The amount of total revenue is equal to the total amount of notes received by Adani Inc., which is $11,000.

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Most popular questions from this chapter

Shaw Company sells goods that cost \(300,000 to Ricard Company for \)410,000 on January 2, 2017. The sales price includes an installation fee, which has a standalone selling price of \(40,000. The standalone selling price of the goods is \)370,000. The installation is considered a separate performance obligation and is expected to take 6 months to complete.

Instructions

(a) Prepare the journal entries (if any) to record the sale on January 2, 2017.

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Instructions

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