McCormick Corporation issued a 4-year, $40,000, 5% note to
Greenbush Company on January 1, 2020, and received a computer that
normally sells for $31,495. The note requires annual interest
payments each December 31. The market rate of interest for a note
of similar risk is 12%.
Prepare McCormick’s journal entries for (a) the January 1 issuance
and (b) the December 31 interest. (Round answers to 0
decimal places, e.g. 38,548. If no entry is required, select "No
Entry" for the account titles and enter 0 for the amounts. Credit
account titles are automatically indented when amount is entered.
Do not indent manually.)
List Of Accounts
Accumulated Depreciation-Equipment Accumulated Depreciation-Machinery Accumulated Depreciation-Plant and Equipment Allowance for Doubtful Accounts Bad Debt Expense Bond Issue Expense Bonds Payable Buildings Cash Common Stock Cost of Goods Sold Debt Investments Depreciation Expense Discount on Bonds Payable Discount on Notes Payable Discount on Notes Receivable Equipment Equity Investments Gain on Disposal of Machinery Gain on Disposal of Land Gain on Disposal of Plant Assets Gain on Redemption of Bonds Gain on Restructuring of Debt Gain on Sale of Machinery Interest Expense Interest Payable Interest Receivable Interest Revenue Inventory Land Loss on Disposal of Equipment Loss on Disposal of Land Loss on Redemption of Bonds Machinery Mortgage Payable No Entry Notes Payable Notes Receivable Paid-in Capital in Excess of Par - Common Stock Paid-in Capital in Excess of Par - Preferred Stock Premium on Bonds Payable Retained Earnings Salaries and Wages Expense Sales Sales Revenue Unamortized Bond Issue Costs Unearned Revenue Unearned Sales Revenue Unrealized Holding Gain or Loss - Equity Unrealized Holding Gain or Loss - Income |
Journal entries
Date | account and explanation | Debit | Credit |
Jan 1 | Cash | 31495 | |
Discount on notes payable | 8505 | ||
Notes payable | 40000 | ||
Dec 31 | Interest expense (31495*12%) | 3779 | |
Discount on notes payable | 1779 | ||
Cash (40000*5%) | 2000 |
McCormick Corporation issued a 4-year, $40,000, 5% note to Greenbush Company on January 1, 2020, and...
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Indigo Corporation issued a 4-year, $47,000, 5% note to Greenbush Company on January 1, 2017, and received a computer that normally sells for $39,551. The note requires annual interest payments each December 31. The market rate of interest for a note of similar risk is 10%. Prepare Indigo’s journal entries for (a) the January 1 issuance and (b) the December 31 interest. (Round answers to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the...