At the beginning of the year, Lambert Motors issued the three notes described below. Interest is paid at year-end. 1. The company issued a two-year, 12%, $720,000 note in exchange for a tract of land. The current market rate of interest is 12% 2. Lambert acquired some office equipment with a fair value of $151,429 by issuing a one-year, $160,000 note. The stated interest on the note is 6% The current market rate of interest is 12% 3. The company purchased a building by issuing a four-year installment note. The note is to be repaid in equal installments of $1 million per year beginning one year hence. The current market rate of interest is 12% Required: Prepare the journal entries to record each of the three transactions and the interest expense at the end of the first year for each
At the beginning of the year, Lambert Motors issued the three notes described below. Interest is paid at year-end. 1. The company issued a two-year, 12%, $720,000 note in exchange for a tract of land. The current market rate of interest is 12% 2. Lambert acquired some office equipment with a fair value of $151,429 by issuing a one-year, $160,000 note. The stated interest on the note is 6% The current market rate of interest is 12% 3. The company purchased a building by issuing a four-year installment note. The note is to be repaid in equal installments of $1 million per year beginning one year hence. The current market rate of interest is 12% Required: Prepare the journal entries to record each of the three transactions and the interest expense at the end of the first year for each
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:At the beginning of the year, Lambert Motors issued the three notes described below. Interest is paid at year-end.
1. The company issued a two-year, 12%, $720,000 note in exchange for a tract of land. The current market rate of interest is 12%)
2. Lambert acquired some office equipment with a fair value of $151,429 by issuing a one-year, $160,000 note. The stated interest
on the note is 6% The current market rate of interest is 12%
3. The company purchased a building by issuing a four-year installment note. The note is to be repaid in equal installments of $1
million per year beginning one year hence. The current market rate of interest is 12%
Required:
Prepare the journal entries to record each of the three transactions and the interest expense at the end of the first year for each
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round
intermediate calculations. Enter your answers in whole dollars. Use tables, Excel, or a financial calculator. (EV of $1. PV of $1, EVA
of $1. PVA of $1. EVAD of $1 and PVAD of $1)
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