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Culver Incorporated provides solar energy services to Toronto. Culver needed to buy additional solar energy panels to meet the demand for its energy product. The
Culver Incorporated provides solar energy services to Toronto. Culver needed to buy additional solar energy panels to meet the demand for its energy product. The Government of Ontario offered an interest-free forgivable loan to Culver in the amount of $450,000. The loan will be forgiven if Culver is able to produce a stated number of kilowatts of energy per year for the next five years. If these conditions are not met, the amount is due to the government in full in five years, Culver believes it will be able to meet the conditions. Culver recently obtained a similar loan from the bank with an annual interest rate of 9%. effective interest method. Present the first three years of the loan. (Hint: Refer to Chapter 3 for tips on calculating. For the amortization table, use the amount arrived at using factor tables.) (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to O decimal places, e.g. 5,275.) Schedule of Note Discount Amortization Debit, Interest Expense Date Credit, Notes Payable 12/31/20 12/31/21 $ 26322 12/31/22 12/31/23 Carrying Amount of Note 292469 318791 28691 347482 31273 378755 Prepare the entry on December 31, 2020, to record the interest-free loan. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to O decimal places, e.g. 5,275.) Date Dec. 31, 2020 Account Titles and Explanation Cash Debit 450000 Credit Unrealized Gain or Loss Notes Payable 157531 292469 Prepare any adjusting journal entry that is necessary at December 31, 2021, the company's fiscal year end. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Dec. 31, 2021 Debit Credit
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