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Drebin Security Systems sold merchandise to a customer in exchange for a $50,000, 5-year, noninterest-bearing notewhen an equivalent loan would carry 10% interest. Drebin would record sales revenue on the date of sale equal to:

A.$50,000.
B.Zero.
C.The future value of $50,000 using a 10% interest rate.
D.The present value of $50,000 using a 10% interest rate.

Respuesta :

Answer:

D.The present value of $50,000 using a 10% interest rate.

Explanation:

Data  are given in the question

Sold merchandise in exchange of $50,000  5-year, non-interest-bearing note

Plus the interest rate on equivalent loan is 10%

So by considering the above information, the sales revenue should be recorded at the current value i.e come by considering the present value of $50,000 having the 10% interest rate

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