Black Company is making plans to finance the following projects: a. Purchase a boat for $50,000 to
Question:
a. Purchase a boat for $50,000 to be repaid in equal monthly payments of $977.51 over the next six years. The bank has quoted an interest rate of 12%.
b. Purchase a property for $125,000. The seller would accept 10 semiannual payments of $15,411.37 at 8% (annual rate).
c. Sell some old equipment for $8,000. Black Company is willing to accept quarterly payments of $1,092 for the next two years at an interest rate of 8% (annual rate).
d. Purchase land and building for $250,000, with a down payment of $50,000, and semiannual payments of $16,048.52 for the next 10 years at an interest rate of 10% (annual rate).
Requirement
For each situation, use the accounting equation to show how the firm would record the first two payments.
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a b c d Principal 50000 Month 1 Month 2 Month 1 2 Annual Interest 120 Cash payment 97751 ...View the full answer
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Related Book For
Financial Accounting: A Business Process Approach
ISBN: 978-0136115274
3rd edition
Authors: Jane L. Reimers
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