You sell a machine for $600,000. You allow the client to pay 1/3 at the time of the sale and 1/3 at the end of year one and 1/3 at the end of year two. The company earns 10% on assets. What value will you record the sale at?
Sales Price:
$ 600,000.00
Down Payment:
$ 200,000.00
Outstanding Balance at Start of Year 1:
$ 400,000.00
Outstanding Balance at Start of Year 2:
0 interest earned Down Payment
10% Interest Earned on the remaining $400,000 for 1 Year
$40,000
10% Interest Earned on the remaining $200,000 for 1 Year
$20,000