Account Titles and ExplanationDebitInterest expense to be reported for 2025 $CreditDetermine the amount of interest expense to report for 2025. (Round answer to O decimal places, e.g. 38,548.) (a) On January 1, 2025, Skysong Inc. purchased land that had an assessed value of $376,000 at the time of purchase. A $585,000, zero-interest-bearing note due January 1, 2028, was given in exchange. There was no established exchange price for the land, nor a readyfair value for the note. The interest rate charged on a note of this type is 12%.Determine at what amount the land should be recorded at January 1, 2025, and the interest expense to be reported in 2025 related tothis transaction. (Round intermediate calculation to 5 decimal places, e.g. 0.23451 and final answers to O decimal places, e.g. 38,548.)Land to be recorded at January 1, 2025Interest expense to be reported$$(b) On January 1, 2025, Concord Furniture borrowed $3,600,000 (face value) from Sinise Co., a major customer, through a zero-interest-bearing note due in 4 years. Because the note was zero-interest-bearing, Concord Furniture agreed to sell furniture to thiscustomer at lower than market price. A 10% rate of interest is normally charged on this type of loan.Prepare the journal entry to record this transaction. (Round intermediate calculation to 5 decimal places, e.g. 0.23451 answers to 0 decimalplaces, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles areautomatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries.)

A zero-interest-bearing note is a debt that does not include the written obligation that the…

(a) On January 1, 2025, Skysong Inc. purchased land that had an assessed value of $376,000 at the time of purchase. A $585,000, zero interest-bearing note due January 1, 2028, was given in exchange. There was no established exchange price for the land, nor a ready fair value for the note. The interest rate charged on a note of this type is 12%.

(a) On January 1, 2025, Skysong Inc. purchased land that had an assessed value of $376,000 at the time of purchase. A $585,000, zero interest-bearing note due January 1, 2028, was given in exchange. There was no established exchange price for the land, nor a ready fair value for the note. The interest rate charged on a note of this type is 12%.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Account Titles and Explanation
Debit
Interest expense to be reported for 2025 $
Credit
Determine the amount of interest expense to report for 2025. (Round answer to O decimal places, e.g. 38,548.)

(a) On January 1, 2025, Skysong Inc. purchased land that had an assessed value of $376,000 at the time of purchase. A $585,000, zero-
interest-bearing note due January 1, 2028, was given in exchange. There was no established exchange price for the land, nor a ready
fair value for the note. The interest rate charged on a note of this type is 12%.
Determine at what amount the land should be recorded at January 1, 2025, and the interest expense to be reported in 2025 related to
this transaction. (Round intermediate calculation to 5 decimal places, e.g. 0.23451 and final answers to O decimal places, e.g. 38,548.)
Land to be recorded at January 1, 2025
Interest expense to be reported
$
$
(b) On January 1, 2025, Concord Furniture borrowed $3,600,000 (face value) from Sinise Co., a major customer, through a zero-
interest-bearing note due in 4 years. Because the note was zero-interest-bearing, Concord Furniture agreed to sell furniture to this
customer at lower than market price. A 10% rate of interest is normally charged on this type of loan.
Prepare the journal entry to record this transaction. (Round intermediate calculation to 5 decimal places, e.g. 0.23451 answers to 0 decimal
places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are
automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries.)

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