Question

On January 1, 2021, Wright Transport sold four school buses to the Elmira School District. In exchange for the buses, Wright received a note requiring payment of $515,000 by Elmira on December 31, 2023. The effective interest rate is 8%

Answer 1

The sales revenue that Wright Transport will recognize on 1st January, 2021 is $408,823.60.

Here, we are going to calculate the sales revenue that Wright Transport will recognize on 1st January, 2021.

• The Formulae for the Sales revenue is Value of note * Present Value Factor at (8%, 3rd year).

Sales Revenue = Value of Note * PVF(8%, 3)

Sales Revenue = $515,000 * (1/1.08)^3

Sales Revenue = $515,000 * 0.79383224

Sales Revenue = $408,823.60

Therefore, the sales revenue that Wright Transport will recognize on 1st January, 2021 is $408,823.60.

The missing question "H(FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.): Required: How much sales revenue would Wright recognize on January 1, 2021, for this transaction?"

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