Question

Can I get some help with the wrong ones.

Recording Purchase of Equipment through Debt and Equity On January 1, 2020, Sidelines Company purchases equipment with an estimated 6-year useful life by making a $5,600 cash payment and issuing a noninterset-bearing note for $19,200 due in two years. The fair value of the the equipment is unknown. An 11% annual interest rate is typical of this transaction. The company uses the effective interest method to amortize interest expense and the straight-line method to estimate depreciation expense. a. Prepare the entry to record the purchase on January 1, 2020. b. Prepare the entry on December 31, 2020, to record (1) interest expense and (2) depreciation expense. c. Indicate the balance sheet presentation related to this transaction as of December 31, 2020. d. Prepare the entry on December 31, 2021, to record (1) interest expense and payment of the note and (2) depreciation expense. e. Assume instead that Sidelines exchanged 400 shares of its own $10 par value common stock along with $5,600 cash for the equipment. At the date of the exchange, the stock was trading on the market at $40 per share. Prepare the entry to record the purchase of equipment. Purchase of Equipment with Debt Purchase of Equipment through Equity

Answer 1

Price of the note = $19200 x 0.81162 = $15583,
Since PV Table is not given, i have calculated values myself, if there is difference in part a calculated, kindly comment with correct figures for that so that i can adjust the remaining solution as per it

a.

Date	Account Titles	Debit	Credit
1-Jan	Equipment	$            21,183
	Discount on Notes Payable	$               3,617
	Cash		$               5,600
	Notes Payable		$            19,200

b.

Date	Account Titles	Debit	Credit
31-Dec	Interest Expense	$           1,714.1
	Discount on Notes Payable		$           1,714.1
	Depreciation Expense	$           3,530.5
	Accumulated Depreciation		$           3,530.5

c.
Equipment, net = $17652.5 i.e. $21183 - 3530.5
Notes Payable, net = $17297.1 i.e. $15583+1714.1

d.

Date	Account Titles	Debit	Credit
31-Dec	Interest Expense	$           1,902.9
	Discount on Notes Payable		$           1,902.9
	Notes Payable	$         19,200.0
	Cash		$         19,200.0
	Depreciation Expense	$           3,530.5
	Accumulated Depreciation		$           3,530.5

e.

Date	Account Titles	Debit	Credit
1-Jan	Equipment	$            21,600
	Cash		$               5,600
	Common Stock		$               4,000
	Paid in Capital in excess of par		$            12,000

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