Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

help with part C please Bonita Inc. has decided to purchase equipment from Central Michigan Industries on January 2, 2020, to expand its production capacity

help with part C please image text in transcribed
image text in transcribed
image text in transcribed
Bonita Inc. has decided to purchase equipment from Central Michigan Industries on January 2, 2020, to expand its production capacity to meet customers' demand for its product. Bonita issues a[n) $880,000, 5-year, zero-interest-bearing note to Central Michigan for the new equipment when the prevailing market rate of interest for obligations of this nature is 12%. The company will pay off the note in five $176,000 installments due at the end of each year over the life of the note. (a) Your answer has been saved. See score details after the due date: Prepare the journal entry at the date of purchase. (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to O decimal places, e.g. 5,275. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter for the amounts.) Credit Account Titles and Explanation Equipment Debit 634,441 Discount on Notes Payable 245,559 Notes Payable 380,000 (b) Your answer has been saved. See score details after the due date. Prepare the journal entry at the end of the first year to record the payment and interest, assuming that the company employs the effective interest method(Round answers to decimal places, eg. 5,275. Credit account titles are automatically indented when 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.) Account Titles and explanation Debit Credit Interest Expense 76133 Notes Payable 176,000 Discount on Notes Payable 176.000 Cash 76133 (c) Prepare the journal entry at the end of the second year to record the payment and interest. (Round answers to decimal places, eg. 5,275. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter for the amounts.) Account Titles and Explanation Debit Credit

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

Managerial Accounting

Authors: John Wild, Ken Shaw, Barbara Chiappetta

8th Edition

1264111924, 9781264111923

More Books

Students also viewed these Accounting questions

Question

Describe five organizational development techniques.

Answered: 1 week ago

Question

Explain the two dimensions of an organizations culture.

Answered: 1 week ago

Question

State why people resist change and how to overcome resistance.

Answered: 1 week ago