Problem 8-7 (with solution) On January 1, 2021, South Company acquired a building for 5,000,000. The entity paid 500,000 down and signed a noninterest bearing note for the balance which is payable in 3 equal annual installments every December 31 of each year. The prevailing interest rate for a note of this type is 12%. The present value of an ordinary annuity of 1 for three periods is 2.4018. Required: 1. Prepare journal entries to record purchase of building on January 1, 2021, first installment payment on December 31, 2021` and interest expense for 2021.
Problem 8-7 (with solution) On January 1, 2021, South Company acquired a building for 5,000,000. The entity paid 500,000 down and signed a noninterest bearing note for the balance which is payable in 3 equal annual installments every December 31 of each year. The prevailing interest rate for a note of this type is 12%. The present value of an ordinary annuity of 1 for three periods is 2.4018. Required: 1. Prepare journal entries to record purchase of building on January 1, 2021, first installment payment on December 31, 2021` and interest expense for 2021.
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
Chapter9: Current Liabilities And Contingent Obligations
Section: Chapter Questions
Problem 6P: Non-Interest-Bearing Note Payable: Present Value On January 1, 2019, Northern Manufacturing Company...
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Problem 8-7 (with solution)
On January 1, 2021, South Company acquired a building for 5,000,000. The entity paid 500,000 down and signed a noninterest bearing note for the balance which is payable in 3 equal annual installments every December 31 of each year.
The prevailing interest rate for a note of this type is 12%. The present value of an ordinary annuity of 1 for three periods is 2.4018.
Required:
1. Prepare
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