Question

Brief Exercise 14-13 Your answer is partially correct. Try again. Bridgeport Corporation issued a 5-year, $84,000, zero-interest-bearing note to Garcia Company on January 1, 2020, and received cash of $84,000. In addition, Bridgeport agreed to sell merchandise to Garcia at an amount less than regular selling price over the 5-year period. The market rate of interest for similar notes is 11%. Prepare Bridgeport Corporation's January 1 journal entry. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answer 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 amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit January 1, 2020 T Cash 84000 TDiscount on Notes Payable PMPJ) 49850 1 Notes Payable 84000 Unearned Revenue 49850 Click if you would like to Show Work for this question: Open Show Work

Answer 1

Zero coupon note value Market rate of interest Present value factor at 11% for 5th year Present value of note payable Discount on notes payable $ 84,000 A 11% 0.59345133 1/(1+0.11)45 $ 49,850 B $ 34,150 A-B Credit Date Account Title 01-01-20 Cash Discount on notes payable Note payable Unearned sales revenue Debit $ 84,000 $ 34,150 $ 84,000 $34,150