Homework Answers
Solution:
Fair value of truck = Present value of note discounted at 11% = $86,400 * PV factor at 11% for 4th period
= $86,400 * 0.65873 = $56,914
| Journal Entries | |||
| Event | Particulars | Debit | Credit |
| a | Truck Dr | $56,914.00 | |
| Discount on notes payable Dr | $29,486.00 | ||
| To Notes Payable | $86,400.00 | ||
| (To record purchase of truck by issue of note) | |||
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Brief Exercise 10-05 Pearl Corporation purchased a truck by issuing an $86,400, 4-year, zero-interest-bearing note to...
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Bref Exercise 10-05 Martinez Corporation purchased a truck by issuing an $110,400, 4 year, zero-interest-bearing note...
Bref Exercise 10-05 Martinez Corporation purchased a truck by issuing an $110,400, 4 year, zero-interest-bearing note to Equinox Inc. The market rate of interest for obligations of this nature is 9%. Prepare the journal entry to record the purchase of the truck (Round present value factor calculations te decimal places 1.25124 and final answers to decimal places 5.275. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry...
Carla Corporation purchased a truck by Issuing an $86,400,4-yea, zero-interest-bearing note to Equinox Inc. The market...
Carla Corporation purchased a truck by Issuing an $86,400,4-yea, zero-interest-bearing note to Equinox Inc. The market rate of interest for obligations of this mature 11%. Prepare the journal entry to record the purchase of this truck. (Round present value factor calculations to decimal places .g. 1.25124 and nalanswers to decimal places 5,275. Credit account titles are automatically Indented when amount is entered. Do not indent manually. If no antry is required, elect"No Entry for the account titles and enter O...
Teal Corporation purchased a truck by issuing an $116,800, 4-year, zero-interest-bearing note to Equinox Inc. The...
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Ayayai Corporation purchased a truck by issuing an $110,400, 4-year, zero-interest-bearing note to Equinox Inc. The market rate of interest for obligations of this nature is 9%. Prepare the journal entry to record the purchase of this truck
Brief Exercise 14-11 Samson Corporation issued a 4-year, $75,000, zero-interest-bearing note to Brown Company on January...
Brief Exercise 14-11 Samson Corporation issued a 4-year, $75,000, zero-interest-bearing note to Brown Company on January 1, 2020, and received cash of $47,664. The implicit interest rate is 12% Prepare Samson's journal entries for (a) the January 1 issuance and (b) the December 31 recognition of interest. (Round answers to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter o for the amounts, Credit account titles are automatically indented when...
On December 31, 2017, BLANK Company borrowed $67,008 from BLANK Bank, signing a 5-year, $103,100 zero-interest-bearing...
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Bank, signing a 5-year, $103,100 zero-interest-bearing note. The
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result, at December 31, 2019, BLANK Bank determined that it was
probable that it would receive back only $77,325 at maturity. The
market rate of interest on loans of this nature is now 10%.
Prepare the entry to record the issuance of the...
On December 31, 2020, Bridgeport Company borrowed $69,348 from Paris Bank, signing a 5-year, $106,700 zero-interest-bearing...
On December 31, 2020, Bridgeport Company borrowed $69,348 from Paris Bank, signing a 5-year, $106,700 zero-interest-bearing note. The note was issued to yield 9% interest. Unfortunately, during 2022, Bridgeport began to experience financial difficulty. As a result, at December 31, 2022, Paris Bank determined that it was probable that it would receive back only $80,025 at maturity. The market rate of interest on loans of this nature is now 10%. Prepare the entry to record the issuance of the loan...
Exercise 10-14 Bramble Inc. has decided to purchase equipment from Central Michigan Industries on January 2,...
Exercise 10-14
Bramble Inc. has decided to purchase equipment from Central
Michigan Industries on January 2, 2020, to expand its production
capacity to meet customers’ demand for its product. Bramble issues
a(n) $720,000, 5-year, zero-interest-bearing note to Central
Michigan for the new equipment when the prevailing market rate of
interest for obligations of this nature is 12%. The company will
pay off the note in five $144,000 installments due at the end of
each year over the life of the...
All the account spaces must be filled. Skysong Corporation issued a 4-year, $40,000, zero-interest-bearing note to...
All the account spaces must be filled.
Skysong Corporation issued a 4-year, $40,000, zero-interest-bearing note to Garcia Company on January 1, 2020, and received cash of $40,000. In addition, Skysong agreed to sell merchandise to Garcia at an amount less than regular selling price over the 4-year period. The market rate of interest for similar notes is 11%. Prepare Skysong Corporation's January 1 journal entry. (Round present value factor calculations to 5 decimal places, eg. 1.25124 and final answer to...
Coronado Corporation purchased a truck by issuing an $84,800, 4-year, zero-interest-bearing note to Equinox Inc. The market rate of interest for obligations of this nature is 11%. Prepare the journal entry to record the purchase of this truck. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry"...
Bref Exercise 10-05 Martinez Corporation purchased a truck by issuing an $110,400, 4 year, zero-interest-bearing note to Equinox Inc. The market rate of interest for obligations of this nature is 9%. Prepare the journal entry to record the purchase of the truck (Round present value factor calculations te decimal places 1.25124 and final answers to decimal places 5.275. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry...
Carla Corporation purchased a truck by Issuing an $86,400,4-yea, zero-interest-bearing note to Equinox Inc. The market rate of interest for obligations of this mature 11%. Prepare the journal entry to record the purchase of this truck. (Round present value factor calculations to decimal places .g. 1.25124 and nalanswers to decimal places 5,275. Credit account titles are automatically Indented when amount is entered. Do not indent manually. If no antry is required, elect"No Entry for the account titles and enter O...
Brief Exercise 14-11 Samson Corporation issued a 4-year, $75,000, zero-interest-bearing note to Brown Company on January 1, 2020, and received cash of $47,664. The implicit interest rate is 12% Prepare Samson's journal entries for (a) the January 1 issuance and (b) the December 31 recognition of interest. (Round answers to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter o for the amounts, Credit account titles are automatically indented when...
On December 31, 2017, BLANK Company borrowed $67,008 from BLANK
Bank, signing a 5-year, $103,100 zero-interest-bearing note. The
note was issued to yield 9% interest. Unfortunately, during 2019,
BLANK company began to experience financial difficulty. As a
result, at December 31, 2019, BLANK Bank determined that it was
probable that it would receive back only $77,325 at maturity. The
market rate of interest on loans of this nature is now 10%.
Prepare the entry to record the issuance of the...
Exercise 10-14
Bramble Inc. has decided to purchase equipment from Central
Michigan Industries on January 2, 2020, to expand its production
capacity to meet customers’ demand for its product. Bramble issues
a(n) $720,000, 5-year, zero-interest-bearing note to Central
Michigan for the new equipment when the prevailing market rate of
interest for obligations of this nature is 12%. The company will
pay off the note in five $144,000 installments due at the end of
each year over the life of the...
All the account spaces must be filled.
Skysong Corporation issued a 4-year, $40,000, zero-interest-bearing note to Garcia Company on January 1, 2020, and received cash of $40,000. In addition, Skysong agreed to sell merchandise to Garcia at an amount less than regular selling price over the 4-year period. The market rate of interest for similar notes is 11%. Prepare Skysong Corporation's January 1 journal entry. (Round present value factor calculations to 5 decimal places, eg. 1.25124 and final answer to...
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