Question

Braxton Technologies, Inc., constructed a conveyor for A&G Warehousers that was completed and ready for use on January 1, 202

0 0
Add a comment Improve this question Transcribed image text
✔ Recommended Answer
Answer #1
1)
Date Account Titles and Explanation Debit Credit
1-Jan-21 Equipment (price determined below) $         81,382.00
Discount on notes payable (difference) $         18,618.00
             Notes payable (face amount) $ 100,000.00
Interest $100000 x 5% x PVOA(4, 11%) = $5000 x 3.1024 $         15,512.00
Principal $10000 x PV(4,11%) = 100000 x .6587 $         65,870.00
Present value (price) of the note $         81,382.00
2)
Period Cash Payment Effective Interest Prior Balance x 11% Increase in Balance Outstanding Balance
1-Jan $     81,382.00
31-Dec-21 5000 $           8,952.02 $     3,952.02 $     85,334.02
31-Dec-22 5000 $           9,386.74 $     4,386.74 $     89,720.76
31-Dec-23 5000 $           9,869.28 $     4,869.28 $     94,590.05
31-Dec-24 5000 $         10,409.96 $     5,409.96 $   100,000.00
Total 20000 $         38,618.00 $   18,618.00
3)
Date Account Titles and Explanation Debit Credit
31-Dec-23 Interest expense $           9,869.28
               Discount on notes payable (difference) $     4,869.28
               Cash $     5,000.00
4) Installment Payment = present value of notes /PVOA(4,11%)
Installment Payment = $81382/3.1024 $         26,231.95
5)
Period Cash Payment Effective Interest Prior Balance x 11% Decrease in Balance Outstanding Balance
1-Jan $     81,382.00
31-Dec-21 $                                                                         26,231.95 $           8,952.02 $ (17,279.93) $     64,102.07
31-Dec-22 $                                                                         26,231.95 $           7,051.23 $ (19,180.72) $     44,921.35
31-Dec-23 $                                                                         26,231.95 $           4,941.35 $ (21,290.60) $     23,630.75
31-Dec-24 $                                                                         26,231.95 $           2,601.20 $ (23,630.75) $              0.00
Total 104927.7978 $         23,545.80 $ (81,382.00)
6)
Date Account Titles and Explanation Debit Credit
31-Dec-23 Interest expense $           4,941.35
Notes payable (difference) $         21,290.60
               Cash $   26,231.95
Add a comment
Know the answer?
Add Answer to:
Braxton Technologies, Inc., constructed a conveyor for A&G Warehousers that was completed and ready for use...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Similar Homework Help Questions
ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT