On January 1, 2022, Ace Company finished landscaping services and accepted in exchange a 10% $400,000 promissory note with a due date of December 31, 2024. Interest is receivable at December 31 each year. Notes with similar risk have a market rate of interest of 5%. Set financial calculator to zero decimal place. Required: (a) Determine the value of the following: N = Answer 1 Question 4 I/Y = Answer 2 Question 4 PMT = $Answer 3 Question 4 FV = $Answer 4 Question 4 (b) The present value of the note was $Answer 5 Question 4 (c) Prepare a Schedule of Note Discount/Premium Amortization for Ace Company under the effective interest method. Ace Company Schedule of Note Discount/Premium Amortization Effective Interest Method Date Cash Interest Amortized Amount Carrying Value of Note Jan 1, 2022 $Answer 6 Question 4 Dec 31, 2022 $Answer 7 Question 4 $Answer 8 Question 4 $Answer 9 Question 4 Answer 10 Question 4 Dec 31, 2023 Answer 11 Question 4 Answer 12 Question 4 Answer 13 Question 4 Answer 14 Question 4 Dec 31, 2024 Answer 15 Question 4 Answer 16 Question 4 Answer 17 Question 4 Answer 18 Question 4 (d) Prepare the journal entries on the following dates: Jan 1, 2022 Dr. Answer 19 Question 4 $Answer 20 Question 4 Cr. Answer 21 Question 4 $Answer 22 Question 4 Dec 31, 2023 Dr. Answer 23 Question 4 $Answer 24 Question 4 Cr. Answer 25 Question 4 $Answer 26 Question 4 Cr. Answer 27 Question 4 $Answer 28 Question 4
On January 1, 2022, Ace Company finished landscaping services and accepted in exchange a 10% $400,000 promissory note with a due date of December 31, 2024. Interest is receivable at December 31 each year. Notes with similar risk have a market rate of interest of 5%.
Set financial calculator to zero decimal place.
Required:
(a) Determine the value of the following:
N = Answer 1 Question 4
I/Y = Answer 2 Question 4
PMT = $Answer 3 Question 4
FV = $Answer 4 Question 4
(b) The present value of the note was $Answer 5 Question 4
(c) Prepare a Schedule of Note Discount/Premium Amortization for Ace Company under the effective interest method.
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Ace Company |
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Schedule of Note Discount/Premium Amortization |
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Effective Interest Method |
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Date |
Cash |
Interest |
Amortized Amount |
Carrying Value of Note |
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Jan 1, 2022 |
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$Answer 6 Question 4 |
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Dec 31, 2022 |
$Answer 7 Question 4 |
$Answer 8 Question 4 |
$Answer 9 Question 4 |
Answer 10 Question 4 |
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Dec 31, 2023 |
Answer 11 Question 4 |
Answer 12 Question 4 |
Answer 13 Question 4 |
Answer 14 Question 4 |
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Dec 31, 2024 |
Answer 15 Question 4 |
Answer 16 Question 4 |
Answer 17 Question 4 |
Answer 18 Question 4 |
(d) Prepare the
Jan 1, 2022
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Dr. Answer 19 Question 4 |
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$Answer 20 Question 4 |
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Cr. Answer 21 Question 4 |
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$Answer 22 Question 4 |
Dec 31, 2023
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Dr. Answer 23 Question 4 |
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$Answer 24 Question 4 |
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Cr. Answer 25 Question 4 |
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$Answer 26 Question 4 |
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Cr. Answer 27 Question 4 |
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$Answer 28 Question 4 |
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