Question

John Company purchases used equipment form Moore Inc. on January 1, 2018 issuing a zero-interest note for $(see below) that matures on (see number of years below). The market value of the equipment is not readily available. John Company’s normal borrowing rate is (see below):

Last Name Face Amount # of Years        Rate  

A – D     $2,000,000                  3          7%                            

E – H     $4,000,000                  4          8%                

I – P      $3,000,000                  5          5%                

Q – S    $5,000,000                  3          6%

T – Z     $6,000,000                  4          6%

                         

1. Record the journal entries at January 1, 2018 (at purchase), the interest entry (if necessary) for each year until maturity of the note and the entry to record the maturity of the note.  

Answer 1

a) JANI 2018 Eau ment 99,L(0,in Noles payo ale uo,o,oco To ㅋecard purchase of ear.rrie, and tssue of note pyable Dec 31 20L81 Pnteve t expense(M40119¥gn) DİKount on nolgr ps.Ef. 2,35210 DEc 3120R| Dn ter est expense (2940119-2352o $&3,026 $215402 6 9434 Dec 31 2a21 2,96,1q6 2,116 Notex paya ble o,oo,coo caf/h o,00000