On December 31, 2010, Tran Co. performed environmental consulting services for Hayden Co. Hayden was short of cash, and Tran Co. agreed to accept a $100,000 zero-interest-bearing note due December 31, 2012, as payment in full. Hayden is some what of a credit risk and typically borrows funds at a rate of 15%. Tran is much more creditworthy and has various lines of credit at 8%.
Instructions:
(a) Prepare the journal entry to record the transaction of December 31, 2010, for Tran Co.
(b) Assuming Tran Co.'s fiscal year-end is December 31, prepare the journal entry for December 31, 2011.
(c) Assuming Tran Co.'s fiscal year-end is December 31, prepare the journal entry for December 31, 2012.