Question
On January 1, 2018, TMX issued a note payable with an expiration date of December 31, 2020 and with a maturity value of $ 40,000
On January 1, 2018, TMX issued a note payable with an expiration date of December 31, 2020 and with a maturity value of $ 40,000 in exchange for $ 30,052. The note has no established interest (non-interest bearing note) and was issued only in exchange for cash. The implicit interest rate for the bond is 10%. The company uses the effective interest method to post the document.
a. Determine the value in the books of the debt that the company will report in the Statement of Financial Position for December 31, 2018.
b. Make the journal entries of 1/1/18 and 12/31/18.
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