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On October 12, 2020, Golf Co

question 7

Essay

On October 12, 2020, Golf Co. received from one of its customers, Ping Co., a $30,500, 8% 90 day note receivable in granting a time extension on Ping's past due account receivable. Golf Co. has a December 31 year end. Ping Co. honoured the note at maturity. Prepare the entries for the issuance of the note, the end of year interest adjustment and the collection of the note at maturity.


Definitions:

General Rule

A basic or principal rule that provides guidance or policy in a given area or operation.

Transfer Price

The price at which goods and services are transferred between departments or subsidiaries of the same company.

Variable Cost

Costs that vary directly with the level of production or sales volume, such as raw materials or direct labor.

General Transfer-Pricing Formula

A method or set of guidelines used to determine the price at which goods and services are transferred between departments or divisions within the same company.

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