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On January 1, 2021, Byner Company purchased a used tractor. Byner paid $5,000 down and signed a noninterest-bearing note requiring $25,000 to be paid on
- On January 1, 2021, Byner Company purchased a used tractor. Byner paid $5,000 down and signed a noninterest-bearing note requiring $25,000 to be paid on December 31, 2023. The fair value of the tractor is not determinable. An interest rate of 10% properly reflects the time value of money for this type of loan agreement. The companys fiscal year is December 31.
Required:
- Prepare the journal entry to record the acquisition of the tractor. Round computations to the nearest dollar.
- How much interest expenses will the company include in its 2021 and 2022, income statement for this note?
- What is the amount of the liability the company will report in its 2021 and 2022 balance sheets for this note?
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Managerial accounting
Authors: ramji balakrishnan, k. s i varamakrishnan, Geoffrey b. sprin
1st edition
471467855, 978-0471467854
