Question
Notes: All note payments include interest Stated rate of interest = Market rate of interest for all notes except Non-interest bearing notes. Transaction: Note 1:
Notes: All note payments include interest
Stated rate of interest = Market rate of interest for all notes
except Non-interest bearing notes.
Transaction:
Note 1: 12/31/2019 Sold Equipment that has an cost of $475,000; and accumulated depreciation of$225,000. The company receivedin exchange a Note which requires 6 annual payments of $50,000. The first payment occurs 12/31/19. The stated rate of interest for the note is 6%.
Requirement A: Record the original transaction, for the seller. Record the transactions through 12/31/22.
Date Description DR CR 12/31/2019
Date Description DR CR 12/31/2020
Date Description DR CR 12/31/2021
Date Description DR CR 12/31/2022
Requirement B: Record the original transaction, for the purchaser. Record the transactions through 12/31/22.
Date Description DR CR 1/1/2020
Date Description DR CR 12/31/2020
Date Description DR CR 12/31/2021
Date Description DR CR 12/31/2022
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Intermediate Accounting Reporting and Analysis
Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach
3rd edition
9781337909402, 978-1337788281
