BayLake Mining Ltd. purchases earth-moving equipment on 1 August 20X6 and signs a three-year note with the supplier, agreeing topay $430,000 on 31 July 20X9. There is no interest in the note. The equipment purchased does not have a readily determinablemarket value. (PV of $1. PVA of $1, and PVAD of $1.) (Use appropriate factor(s) from the tables provided.)Required:1-a. Does Bay Lake Mining Ltd. actually have a no-Interest loan?1-b. This part of the question is not part of your Connect assignment.2. Calculate the present value of the note payable, using an interest rate of 7%. (Round time value factor to 5 decimal places andfinal answer to the nearest dollar amount.)Present valueYear3. This part of the question is not part of your Connect assignment.4. Prepare a table that shows the balance of the note payable and Interest expense over the life of the note. (Round your finalanswers to the nearest dollar amount.)No1YesNo21233Answer is complete and correct.$351,008 ✔45. Provide all entries for the note for 20X6 and 20X7. Record adjusting entries at the end of the fiscal year and on the anniversary dateof the loan. Use the gross method. (If no entry is required for a transaction/event, select "No Journal entry required" in the firstaccount field. Round your intermediate calculations and final answers to the nearest dollar amount.)OpeningNetLiabilityAnswer is complete and correct.InterestExpense @MarketRate$ 351,008 $375,579✔401,870✔Date1 August 20X631 July 20X724,571 $ 375,57926,291 ✔ 401,87028,130✔430,000ClosingNetLiabilityAnswer is complete but not entirely correct.General Journal31 December 20X6 Interest expenseEquipmentDiscount on note payableNote payableDiscount on note payableInterest expenseDiscount on note payable31 December 20X7 Interest expenseDiscount on note payable›››››✔33>>Debit351,00878,992 X10,238 ✔14,33310,955 →Credit430,00010,238✔✔14,333✔10,955 ✔

The company can purchase assets by issuing notes. The note can be interest-bearing or…

Bay Lake Mining Ltd. purchases earth-moving equipment on 1 August 20X6 and signs a three-year note with the supplier, agreeing to pay $430,000 on 31 July 20X9. There is no interest in the note. The equipment purchased does not have a readily determinable market value. (PV of $1. PVA of $1, and PVAD of $1.) (Use appropriate factor(s) from the tables provided.) Required: 1-a. Does Bay Lake Mining Ltd. actually have a no-interest loan? 1-b. This part of the question is not part of your Connect assignment. 2. Calculate the present value of the note payable, using an Interest rate of 7%. (Round time value factor to 5 decimal places and final answer to the nearest dollar amount.) Present value S Ⓒ Yes No 3. This part of the question is not part of your Connect assignment. 4. Prepare a table that shows the balance of the note payable and Interest expense over the life of the note. (Round your final answers to the nearest dollar amount.) Year 1 No 2 3 Answer is complete and correct. 351,008 1 2 3 4 Opening Net Liability Answer is complete and correct. Interest Expense @ Market Rate $ 351,008 375,579 401,870 5. Provide all entries for the note for 20X6 and 20X7. Record adjusting entries at the end of the fiscal year and on the anniversary date of the loan. Use the gross method. (If no entry is required for a transaction/event, select "No Journal entry required" in the first account field. Round your Intermediate calculations and final answers to the nearest dollar amount.) Date 1 August 20X6 S 31 July 20X7 24,571 26,291 28,130 31 December 20X6 Interest expense Closing Net Liability Answer is complete but not entirely correct. General Journal $ 375,579 401,870 430,000 Equipment Discount on note payable Note payable Interest expense Discount on note payable 31 December 20X7 Interest expense Discount on note payable Discount on note payable 333 ›› ✔ ❤❤ ›› Debit 351,008 78,992 10,238 14,333 10,955 Credit 430,000 10,238 ✔ 14,333 10,955

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q