Tamarisk Corporation purchased a computer on December 31, 2019, for $126,000, paying $36,000 down and agreeing to pay the balance in five equal installments of $18,000 payable each December 31 beginning in 2020. An assumed interest rate of 8% is implicit in the purchase price. Prepare the journal entry at the date of purchase. Prepare the journal entry at December 31, 2020, to record the payment and interest (effective-interest method employed). Prepare the journal entry at December 31, 2021, to record the payment and interest (effective-interest method employed).
1.
Date | Account Title and Explanation | Debit | Credit |
December 31 2019 | Equipment | 93495 | |
Discount on Notes Payable | 32505 | ||
Notes Payable | 90000 | ||
Cash | 36000 | ||
(Recorded Purchase of Equipment) |
2)
Date | Account Title and Explanation | Debit | Credit |
December 31 2020 | Interest Expenses | 4600 | |
Notes Payable | 18000 | ||
Discount on Notes Payable | 4600 | ||
Cash | 18000 | ||
(Recorded Payment of 1st installment & interest expenses) |
3)
Date | Account Title and Explanation | Debit | Credit |
December 31 2021 | Interest Expenses | 3528 | |
Notes Payable | 18000 | ||
Discount on Notes Payable | 3528 | ||
Cash | 18000 | ||
(Recorded Payment of 2nd installment & interest expenses) |
Working
1)Notes Payable = 18000*5 = 90000
Equipment = 36000 + 18000*(1-(1+8%)^-5)/10%
Equipment = 93495
Discount on Notes Payable = 126000-93495 = 32505
2) Interest Expense = (90000-32505)*8% = 4600
Amortization of Discount = 4600
Unamortized discount = 32505 - 4600= 27905
3) Interest Expenses = (90000-18000 - 27905)*8% = 3528
Tamarisk Corporation purchased a computer on December 31, 2019, for $126,000, paying $36,000 down and agreeing...
Monty Corporation purchased a computer on December 31, 2019, for $149,100, paying $42,600 down and agreeing to pay the balance in five equal installments of $21,300 payable each December 31 beginning in 2020. An assumed interest rate of 8% is implicit in the purchase price. Prepare the journal entry at the date of purchase. (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 2 decimal places, e.g. 52.75. Credit account titles are automatically indented when amount...
Exercise 10-15 Martinez Corporation purchased a computer on December 31, 2019, for $130,200, paying $37,200 down and agreeing to pay the balance in five equal installments of $18,600 payable each December 31 beginning in 2020. An assumed interest rate of 8% is implicit in the purchase price. Prepare the journal entry at the date of purchase. (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 2 decimal places, e.g. 52.75. Credit account titles are automatically indented...
Exercise 10-15 Martinez Corporation purchased a computer on December 31, 2019, for $130,200, paying $37,200 down and agreeing to pay the balance in five equal installments of $18,600 payable each December 31 beginning in 2020. An assumed interest rate of 8% is implicit in the purchase price. Prepare the journal entry at the date of purchase. (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 2 decimal places, e.g. 52.75. Credit account titles are automatically indented...
Larkspur Corporation purchased a computer on December 31, 2019, for $144,900, paying $41,400 down and agreeing to pay the balance in five equal installments of $20,700 payable each December 31 beginning in 2020. An assumed interest rate of 10% is implicit in the purchase price. (a) Prepare the journal entry at the date of purchase. (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 2 decimal places, e.g. 52.75. Credit account titles are automatically indented when...
Cheyenne Corporation purchased a computer on December 31, 2019, for $140,700, paying $40,200 down and agreeing to pay the balance in five equal installments of $20,100 payable each December 31 beginning in 2020. An assumed interest rate of 9% is implicit in the purchase price. (a) Prepare the journal entry at the date of purchase. (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 2 decimal places, e.g. 52.75. Credit account titles are automatically indented when...
Exercise 10-15 Blossom Corporation purchased a computer on December 31, 2019, for $149, 100, paying $42,600 down and agreeing to pay the balance in five equal installments of $21,300 payable each December 31 beginning in 2020. An assumed interest rate of 8% is implicit in the purchase price. Prepare the journal entry at the date of purchase. (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 2 decimal places, e.g. 52.75. Credit account titles are automatically...
Exercise 10-15 Bonita Corporation purchased a computer on December 31, 2019, for $157,500, paying $45,000 down and agreeing to pay the balance in five equal installments of $22,500 payable each December 31 beginning in 2020. An assumed interest rate of 9% is implicit in the purchase price. Your answer is partially correct. Try again. Prepare the journal entry at the date of purchase. (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 2 decimal places, e.g....
Exercise 10-15 Windsor Corporation purchased a computer on December 31, 2019, for $111,300, paying $31,800 down and agreeing to pay the balance in five equal installments of $15,900 payable each December 31 beginning in 2020. An assumed interest rate of 9% is implicit in the purchase price. Your answer is partially correct. Try again. Prepare the journal entry at the date of purchase. (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 2 decimal places, e.g....
Swifty Corporation purchased a computer on December 31 2016 for $119,700 ing $34,200 down and agreeing to pay the balance in five equal installments of $17,100 payable each December 31 beginning in 2017. An assumed interest rate of 8% s mplicit in the purchase price he Purchase priced comp Prepare the journal entry at the date of purchase. (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 5,275. Credit account titles are...
Problem 14- Whispering Cosmetics Co. purchased machinery on December 31, 2016, paying $50,200 down and agreeing to pay the balance in four equal installments of $41,600 payable each December 31. An assumed interest of 8% is implicit in the purchase price. Prepare the journal entries that would be recorded for the purchase and for (1) the payments and (2) interest on the following dates. (Round answers to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry"...