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E7-14 (LO4,6) (Notes Receivable with Unrealistic Interest Rate) On December 31, 2015, Ed Abbey Co....

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Accounting

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E7-14 (LO4,6) (Notes Receivable with Unrealistic Interest Rate) On December 31, 2015, Ed Abbey Co. performed environ- mental consulting services for Hayduke Co. Hayduke was short of cash, and Abbey Co. agreed to accept a $200,000 zero-inter- est-bearing note due December 31, 2017, as payment in full. Hayduke is somewhat of a credit risk and typically borrows funds at a rate of 10%. Abbey is much more creditworthy and has various lines of credit at 6%. Instructions (a) Prepare the journal entry to record the transaction of December 31, 2015, for the Ed Abbey Co. (b) Assuming Ed Abbey Co.'s fiscal year-end is December 31, prepare the journal entry for December 31, 2016. (c) Assuming Ed Abbey Co.'s fiscal year-end is December 31, prepare the journal entry for December 31, 2017

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