Royall Company purchased factory equipment by signing a 5-year zero interest bearing note which requires a single payment of $160,000 at the maturity of the note. The market interest rate at the time of signing the note was 3%. Provide journal entry for recoding the purchase of equipment.
The following is list of accounts each represented by letter(s).
| A | Accounts Payable | U | Loss from discontinued operations | |
| B | Accounts Receivable | V | Losses due to fire | |
| E | W | Merchandise Inventory | ||
| F | Bonds Payable | X | Notes Payable | |
| G | Cash | Y | Premium on Bonds Payable | |
| H | Cost of Goods Sold | Z | Rent Expense | |
| I | Capital Lease Payable | AA | Rent Revenue | |
| J | Discount on Bonds Payable | BB | ||
| K | Equipment | EE | Salaries and Wages Payable | |
| L | Federal Income Tax Withheld Payable | FF | Sales Returns | |
| M | Federal |
GG | Sales Revenues | |
| N | FICA Taxes Payable | HH | Sales Taxes Payable | |
| O | Income Summary | II | Shipping Expense | |
| P | Income Taxes Payable | JJ | State Income Tax Withheld Payable | |
| Q | Interest Expense | KK | State Unemployment Taxes Payable | |
| R | Interest Payable | LL | Supplies | |
| S | Land | MM | Tax Expense | |
| T | Land Improvement | NN | Unearned Rent Revenue |
Example of Answer: G4000D,B2000D,GG5000C,HH1000C
Where G denotes Cash account, 4000 is the amount, D stands for debit, B denotes Accounts Receivable account, 2000 is the amount, D stands for debit, GG denotes Service Revenues, 5000 is the amount, and C stands for credit, HH denotes Sales Taxes Payable, 1000 is the amount, C stands for Credit. The letters are in capital. Comma is used to separate the changes in each account. Don’t use dollar sign, decimal point, or space in any place. If in an entry requires more than one debit or credit accounts, first enter debit accounts (in order of dollar amount – large amount to small amount), then the credit accounts (in order of dollar amount – large amount to small amount).
Royall Company purchased factory equipment by signing a 5-year zero interest bearing note which requires a single payment of $160,000 at the maturity of the note. The market interest rate at the time of signing the note was 3%. Provide
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