Question
Harris Company borrowed $60,000 on a two-year, 8% note dated October 1, 2016.Interest is payable annually on October 1, 2017, and October 1, 2018, the
Harris Company borrowed $60,000 on a two-year, 8% note dated October 1, 2016.Interest is payable annually on October 1, 2017, and October 1, 2018, the maturity date of the note.The company prepares its financial statements on a calendar year basis.Prepare all journal entries relating to the note for 2016, 2017, and 2018.
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On January 1, 2017, Roma Company leased a tractor. The lease agreement qualifies as a capital lease and calls for payments of $10,000 per year (payable each year on January 1, starting in 2018) for eight years. The annual interest rate on the lease is 10%. Roma Company uses a calendar-year reporting period.
Prepare the journal entry for January 1, 2017, to record the leasing of the tractor:
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Prepare the journal entry for December 31, 2017, to recognize the interest expense for the year 2017.
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Prepare the journal entry to record the first lease payment.
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Prepare the journal entry for December 31, 2018, to recognize the interest expense for the year 2018.
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Prepare the journal entry to record the January 1, 2019 lease payment.
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