This would be the journal entry to record the transaction
for the non-interest bearing note:
January 1, 2016
Debit Notes Receivable 605,000
Credit Discount on notes receivable (605,000 – 500,000)
105,000
Credit Sales Revenue 500,000
As for the interest at the end of the month
Debit Discount on notes receivable 2,520.83
Credit Interest Revenue 2,520.83
Computation: 605,000 x .10 divided by 24 since it is 2 years
