Question
On December 31, 2011, Hurly Co. performed environmental consulting services for Cascade Co. Cascade was short of cash, and Hurly Co. agreed to accept a
On December 31, 2011, Hurly Co. performed environmental consulting services for Cascade Co. Cascade was short of cash, and Hurly Co. agreed to accept a $328,800 zero-interest-bearing note due December 31, 2013, as payment in full. Cascade is somewhat of a credit risk and typically borrows funds at a rate of 10%. Hurly is much more creditworthy and has various lines of credit at 6%. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places, E.g. $6,538. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
(a) | Prepare the journal entry to record the transaction of December 31, 2011, for the Hurly Co. | |
(b) | Assuming Hurly Co.s fiscal year-end is December 31, prepare the journal entry for December 31, 2012. | |
(c) | Assuming Hurly Co.s fiscal year-end is December 31, prepare the journal entry for December 31, 2013. | |
(d) | Assume that Hurly Co. elects the fair value option for this note. Prepare the journal entry at December 31, 2012, if the fair value of the note is $323,770 a. should have 3 entries. b. should have 2 entries c.(to record interest transaction) 2 entries (collection of the note) 2 entries. d. 2 entries. |
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