Question
On December 31, 2020, Nash Company acquired a computer from Plato Corporation by issuing a $592,000 zero-interest-bearing note, payable in full on December 31, 2024.
On December 31, 2020, Nash Company acquired a computer from Plato Corporation by issuing a $592,000 zero-interest-bearing note, payable in full on December 31, 2024. Nash Companys credit rating permits it to borrow funds from its several lines of credit at 12%. The computer is expected to have a 5-year life and a $66,000 salvage value.
1. Prepare the journal entry for the purchase on December 31, 2020. (Round present value factor calculations to 5 decimal places,)
Date | Account Titles and Explanation | Debit | Credit |
December 31, 2020 | |||
2. Prepare any necessary adjusting entries relative to depreciation (use straight-line) and amortization (use effective-interest method) on December 31, 2021. (Round answers to 0 decimal places)
Date | Account Titles and Explanation | Debit | Credit |
December 31, 2021 | |||
(To record the depreciation.) | |||
December 31, 2021 | |||
(To amortize the discount.) |
Schedule of Note Discount Amortization | |||||
Date | Debit, Interest Expense Credit, Discount on Notes Payable | Carrying Amount of Note | |||
12/31/20 | $ | $ | |||
12/31/21 | |||||
12/31/22 | |||||
12/31/23 | |||||
12/31/24 |
3. Prepare any necessary adjusting entries relative to depreciation and amortization on December 31, 2022. (Round answers to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Date | Account Titles and Explanation | Debit | Credit |
December 31, 2022 | |||
(To record the depreciation.) | |||
December 31, 2022 | |||
(To amortize the discount.) |
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