Question

On December 31, 2020, Cullumber Co. performed environmental consulting services for Hayduke Co. Hayduke was short of cash, and Cullumber Co. agreed to accept a $298,600 zero-interest-bearing note due December 31, 2022, as payment in full. Hayduke is somewhat of a credit risk and typically borrows funds at a rate of 10%. Cullumber is much more creditworthy and has various lines of credit at 6%.1) Prepare the journal entry to record the transaction of December 31, 2020, for the Cullumber Co.2) Assuming Cullumber Co.’s fiscal year-end is December 31, prepare the journal entry for December 31, 2021.3) Assuming Cullumber Co.’s fiscal year-end is December 31, prepare the journal entry for December 31, 2022.

Answer 1

Answer

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Explanation  

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