Equipment manufacturer-transaction for fishbone corporation

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On January 1, 2014, Fishbone Corporation (an equipment manufacturer) sold equipment to Lost Company that cost $150,000. Fishbone received as consideration a down payment of $100,000 and a $240,000, 5% interest-bearing note due on December 31, 2016. The prevailing rate of interest for a note of this type on January 1, 2014, was 5%.

Record the 1/1/14 transaction for Fishbone Corporation and all necessary entries from 2014-2016.

Record the 1/1/14 transaction for Lost Company and all necessary entries from 2014-2016.

I don't understand when and how to deal with the downpayment. After I journalize that it was received at the beginning, is it a factor again at any point? Is the gain on the sale the regular gain + the down payment?

Reference no: EM13825400

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