Journal entries:
Date | Account title and explanation | Debit | Credit |
Jan 1,2017 | Cash | $508,000 | |
Discount on notes payable (508,000 x 8% x 3 years) | $121,920 | ||
Notes payable | $508,000 | ||
Unearned sales revenue | $121,920 | ||
[To record issuance of notes payable] | |||
Dec 31,2017 | Interest expense [508,000 x 8%] | $40,640 | |
Discount on notes payable | $40,640 | ||
[To record interest expense] | |||
Dec 31,2017 | Unearned sales revenue [508,000 x 8%] | $40,640 | |
Sales revenue | $40,640 | ||
[To record unearned sales revenue] |
Explanation:
Interest is compensated by discount on sales. Hence, discount on notes payable is written of by interest expense over 3 years and Unearned sales revenue written off by Sales revenue over 3 years.
Exercise 14-18 On January 1, 2017, Oriole Co. borrowed and received $508,000 from a major customer...
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if you can pls show work... thanks Exercise 14-18 On January 1, 2017, Crane Co. borrowed and received $488,000 from a major customer evidenced by a zero-interest-bearing note due in 5 years. As consideration for the zero-interest-bearing feature, Crane agrees to supply the customer's inventory needs for the loan period at lower than the market price. The appropriate rate at which to impute interest is 10%. (a) Prepare the journal entry to record the initial transaction on January 1, 2017....
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A B Prepare all necessary journal entries for Oriole for this lease through January 1, 2018. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places e.g. 58,971.) On January 1, 2017, Oriole Corporation signed a 5-year noncancelable lease for a machine. The terms of the lease called for Oriole to make...