Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A business borrowed $200,000 on January 1, 2019 to be paid back on January 1 2022. On January 1, 2019, the business received an amount

A business borrowed $200,000 on January 1, 2019 to be paid back on January 1 2022. On January 1, 2019, the business received an amount equal to $200,000, less discounted interest based on 11.5% per year, which is the market rate. The company closes its books every December 31. a. Prepare the journal entry for the debtor on January 1, 2019. b. Prepare the journal entry on December 31, 2020 related to this debt. Suppose that the company from the previous exercise number 4 received the full sum of $200,000 on January 1, 2019 and committed to repay the loan by making three annual payments (January 1 of 2020, 2021 and 2022) equal based on an interest rate of 11.5%.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Contemporary Auditing

Authors: Michael C Knapp

12th Edition

357515404, 978-0357515402

More Books

Students also viewed these Accounting questions