Question

On January 1, 2021, Wooten Technology Associates sold computer equipment to the Denison Company. Delivery was made on January 1, 2021, but payment for the equipment of $10,100 is not due until December 31, 2021. Assuming that Wooten views the time value of money to be a significant component of this transaction and that an 12% interest rate is applicable. (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.) How much sales revenue would Wooten recognize on January 1, 2021

Answer 1

Answer: $‭9,017.89

Explanation:

Wooten will recognize the present value of $10,100 as it is to be paid to them in a year and the company sees time value of money as a significant component.

= 10,100 * Present value interest factor, 12%, 1 period

= 10,100 * 0.89286

= $‭9,017.886‬

= $‭9,017.89