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Use the following illustration to answer questions 11-13: On January 1, 2020 Fast Electronics Co. purchases equipment by issuing a 6%, 5-year promissory note having
Use the following illustration to answer questions 11-13: On January 1, 2020 Fast Electronics Co. purchases equipment by issuing a 6%, 5-year promissory note having a maturity value of $300,000 (interest is paid annually). The market rate for the note is 8%.
- What is the journal entry recorded for the purchase of the equipment?
- Debit- equipment $276,044, Credit- notes payable $276,044
- Debit- equipment $276,044, discount on note $23,956, Credit- notes payable $300,000
- Debit- equipment $300,000, Credit- notes payable $300,000
- Debit- equipment $300,000, Credit- notes payable $276,044, premium on note $23,956
- What is the amount of interest expense calculated for December 31, 2020?
- $18,000
- $24,000
- $22,080
- $16,563
- What accounts are debited and credited to record interest expense on December 31, 2020?
- Debit- Interest Expense, Credit- Interest Payable, Discount on Notes Payable
- Debit- Interest Payable, Credit- Interest Expense
- Debit- Interest Expense, Discount on Notes Payable, Credit- Interest Payable
- Debit- Interest Expense, Credit- Interest Payable, Premium on Notes Payable
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