NEW YEARS EVE SALE!!! 24-MONTH ZERO % FINANCING!!! ONE DAY ONLY!!! It is December 31,...
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NEW YEARS EVE SALE!!! 24-MONTH ZERO % FINANCING!!! ONE DAY ONLY!!!
It is December 31, 2020 and Boyer Chevrolet offers a customer a 2020 Malibu for $29,000 but with 2-years to pay. The customer is asked to sign the promissory note depicted below.
The accountant at Boyer proposes the following accounting for the deal.
| Date | Account Titles | Debit | Credit |
| 2020 | |||
| Dec 31 | Notes receivable | 29,000 | |
| Sales | 29,000 | ||
The accountant smiled as he overlooked the busy showroom and was overheard making the following comment: with this sale, we should be able to hit our profit targets for the 4thquarter and get our bonuses.
A Malibu of this type normally sells for a cash price of $25,000. Do you agree with the above accounting? If not, provide an alternative accounting for the deal.
| Date | Account Titles | Debit | Credit |
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