Instructions On January 1, 2019, the Porter Corporation issued a five-year, non-interest-bearing, $44,000 note to Longshore Corporation in exchange for used equipment. Neither the fair market value of the equipment nor that of the note is determinable. The incremental borrowing rate of Porter is 12% and the incremental borrowing rate of Longshore is 10%. Present value factors for n = 5 years are Interest Rate PV of $1 10% 0.620921 12% 0.567427 Required: a. Prepare the journal entry to record the issuance of the note by Porter on January 1, 2019. b. Prepare the journal entry to record the interest expehse on December 31, 2019. C. Prepare the journal entry to record the interest expense on December 31, 2020.

Instructions On January 1, 2019, the Porter Corporation issued a five-year, non-interest-bearing, $44,000 note to Longshore Corporation in exchange for used equipment. Neither the fair market value of the equipment nor that of the note is determinable. The incremental borrowing rate of Porter is 12% and the incremental borrowing rate of Longshore is 10%. Present value factors for n = 5 years are Interest Rate PV of $1 10% 0.620921 12% 0.567427 Required: a. Prepare the journal entry to record the issuance of the note by Porter on January 1, 2019. b. Prepare the journal entry to record the interest expehse on December 31, 2019. C. Prepare the journal entry to record the interest expense on December 31, 2020.

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

Instructions
On January 1, 2019, the Porter Corporation issued a five-year, non-interest-bearing, $44,000 note to Longshore Corporation in exchange for used equipment. Neither the fair market value of
the equipment nor that of the note is determinable. The incremental borrowing rate of Porter is 12% and the incremental borrowing rate of Longshore is 10%. Present value factors for n = 5
years are
Interest Rate
PV of $1
10%
0.620921
12%
0.567427
Required:
a. Prepare the journal entry to record the issuance of the note by Porter on January 1, 2019
b. Prepare the journal entry to record the interest expehse on December 31, 2019.
c. Prepare the journal entry to record the interest expense on December 31, 2020

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