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Recording a Note Payable Issued for Non - Cash Consideration Lathrop Inc. purchased equipment on January 1 of Year 1 for $ 7 5 0
Recording a Note Payable Issued for NonCash Consideration
Lathrop Inc. purchased equipment on January of Year for $ cash plus a note payable. The fair value of the equipment on January of Year is $ The company uses the effective interest method to amortize discounts and premiums. The market rate is
Required
Record the entries on January of Year and December of each yearend for the following three separate scenarios for the note payable.
a The principal of $ is due on December of Year and the note states interest payable each December over the twoyear period.
b The face value of the note payable is $ and is due on December of Year The note is structured as a zerointerestbearing note payable over a twoyear period.
c The note is due on December of Year with equal payments of $ due on each December over the term of the note. The note will be fully paid upon maturity.
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