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Chen Inc. accepted a two-year noninterest-bearing note for $605,000 on January 1, 2021. The note...

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Accounting

Chen Inc. accepted a two-year noninterest-bearing note for $605,000 on January 1, 2021. The note was accepted as payment for merchandise with a fair value of $500,000. The effective interest rate is 10%. What is the correct entry to record the note?

Multiple Choice

  • Notes receivable 605,000
    Interest revenue 105,000
    Cost of sales 500,000
  • Notes receivable 500,000
    Accounts receivable 500,000
  • Notes receivable 605,000
    Discount on notes receivable 105,000
    Sales revenue 500,000
  • Notes receivable 605,000
    Accounts receivable 605,000

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