On December 31, 2021, you sold your gently used car to your friend, Student Y. Instead of a full cash payment, Student Y gave you a $4,000 cash down payment, and also a 2-year, $25,000, 8% note (your financial advisor notified you t that this is an unrealistic rate of interest for a note of this type and that the more realistic rate is 10%). The note required interest to be paid annually on December 31. You normally prepare your financial statements on a calendar-year basis. Required: Show all work that leads to the preparation of the necessary journal entries for your Company for the following dates: (4.b.1.) December 31, 2021 (4.b.2.) December 31, 2022 (4.b.3.) December 31, 2023 Label your solution clearly. Note that a clear and full presentation of your work (SHOW ALL WORK) is part of the graded exam requirement.
On December 31, 2021, you sold your gently used car to your friend, Student Y. Instead of a full cash payment, Student Y gave you a $4,000 cash down payment, and also a 2-year, $25,000, 8% note (your financial advisor notified you t that this is an unrealistic rate of interest for a note of this type and that the more realistic rate is 10%). The note required interest to be paid annually on December 31. You normally prepare your financial statements on a calendar-year basis. Required: Show all work that leads to the preparation of the necessary journal entries for your Company for the following dates: (4.b.1.) December 31, 2021 (4.b.2.) December 31, 2022 (4.b.3.) December 31, 2023 Label your solution clearly. Note that a clear and full presentation of your work (SHOW ALL WORK) is part of the graded exam requirement.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable
Section: Chapter Questions
Problem 28E: On January 1, 2019, Northfield Corporation becomes delinquent on a 100,000, 14% note to First...
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Transcribed Image Text:On December 31, 2021, you sold your gently used car to your friend, Student Y. Instead of a full cash payment, Student
Y gave you a $4,000 cash down payment, and also a 2-year, $25,000, 8% note (your financial advisor notified you that
this is an unrealistic rate of interest for a note of this type and that the more realistic rate is 10%). The note required
interest to be paid annually on December 31. You normally prepare your financial statements on a calendar-year basis.
Required: Show all work that leads to the preparation of the necessary journal entries for your Company for the
following dates:
(4.b.1.) December 31, 2021
(4.b.2.) December 31, 2022
(4.b.3.) December 31, 2023
Label your solution clearly. Note that a clear and full presentation of your work (SHOW ALL WORK) is part of the
graded exam requirement.
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