Reference no: EM133069777
Question - Notes Receivable - On January 1, 2018, London Inc. sold $50,000 worth of goods to Sarnia Ltd. It was determined that Sarnia Inc. had poor credit and signed a three year, zero-interest bearing note. London can borrow money at an interest rate of 1.5%.
Assume both companies follow IFRS (the effective-interest method of amortization).
Required -
A) Calculate the present value of the note receivable. Show your work for part marks.
B) Prepare the following entries for London Inc.:
1- Provide the journal entry required on January 1, 2018.
2- Provide the journal entry required on December 31, 2018.
3- Provide the journal entry required on December 31, 2019.
4- Provide the journal entry required on December 31, 2020.
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: Notes Receivable - On January 1, 2018, London Inc. sold $50,000 worth of goods to Sarnia Ltd. Calculate the present value of the note receivable
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