Arctic Cat sold Seneca Motor Sports a shipment of snowmobiles. The snowmobiles were delivered on January 1, 2024, and Arctic received a note from Seneca indicating that Seneca will pay Arctic $40,000 on a future date. Unless informed otherwise, assume that Arctic views the time value of money component of this arrangement to be significant and that the relevant interest rate is 8%.
Required:
1. Assume the note indicates that Seneca is to pay Arctic the $40,000 due on the note on December 31, 2024. Prepare the journal entry for Arctic to record the sale on January 1, 2024.
2. Assume the same facts as in requirement 1, and prepare the journal entry for Arctic to record collection of the payment on December 31, 2024.
3. Assume instead that Seneca is to pay Arctic the $40,000 due on the note on December 31, 2025. Prepare the journal entry for Arctic to record the sale on January 1, 2024.
4. Assume instead that Arctic does not view the time value of money component of this arrangement to be significant and that the note indicates that Seneca is to pay Arctic the $40,000 due on the note on December 31, 2024. Prepare the journal entry for Arctic to record the sale on January 1, 2024.
