170k views
2 votes
On January 1, 2021, Glanville Company sold goods to Otter Corporation. Otter signed an installment note requiring payment of $21,000 annually for five years. The first payment was made on January 1, 2021. The prevailing rate of interest for this type of note at date of issuance was 8%. Glanville should record sales revenue in January 2021 _________.

User Cesards
by
7.4k points

1 Answer

5 votes

Answer:

$104,846.70

Step-by-step explanation:

The computation of the sales revenue recorded is shown below:

= Annual payments + annual payment × PVIFA factor for 8% at 5 years

where,

Annual payments is $21,000

And, the PVIFA factor is 3.9927

So, the sales revenue is

= $21,000 + $21,000 × 3.9927

= $21,000 + $83,846.70

= $104,846.70

The sales value should be equal to the annual payment or par value

And, refer to the PVIFA table

User Jelinson
by
7.9k points
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.