Question

On January 2, 2017, Adani Inc. sells goods to Geo Company in exchange for a zero-interest-bearing note with face value of \(11,000, with payment due in 12 months. The fair value of the goods at the date of sale is \)10,000 (cost $6,000). Prepare the journal entry to record this transaction on January 2, 2017. How much total revenue should be recognized in 2017?

Short answer

Total revenue computed for Adani Inc. is $11,000.

Step-by-step solution

Meaning of Total Revenue

The value of total revenue of a company comes after multiplying the number of units sold and the price charged for one unit Ignoring a loss position in the business requires the company to earn total revenue more than the total cost.

Journal entries are as follows

Date	Particulars	Debit ($)	Credit ($)
January 2, 2017	Note receivables a/c Dr.	11,000
	To Sales revenue a/c		10,000
	To Discount on note receivables a/c		1,000
January 2, 2017	Cost of goods sold a/c Dr.	6,000
	To Inventory a/c		6,000

The amount of total revenue is equal to the total amount of notes received by Adani Inc., which is $11,000.