Marks Company sold goods to Birch Company totaling $51,830 during 2020. When Birch was unable to meet Marks’ normal terms, Marks accepted from Birch a $60,000, 3-year non-interest-bearing note due 1/1/24. (Marks has accepted notes in the past in settlement of open accounts.) Required: (a) Prepare Marks’ journal entry on 1/1/21 when the note was signed. (b) Prepare a table which shows the amortization of bond discount over the life of the note. (c) What is the 12/31/22 adjusting entry that will be recorded by Marks? (d) What is the purpose of the journal entry at 12/31/22?
Marks Company sold goods to Birch Company totaling $51,830 during 2020. When Birch was unable to meet Marks’ normal terms, Marks accepted from Birch a $60,000, 3-year non-interest-bearing note due 1/1/24. (Marks has accepted notes in the past in settlement of open accounts.) Required: (a) Prepare Marks’ journal entry on 1/1/21 when the note was signed. (b) Prepare a table which shows the amortization of bond discount over the life of the note. (c) What is the 12/31/22 adjusting entry that will be recorded by Marks? (d) What is the purpose of the journal entry at 12/31/22?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Marks Company sold goods to Birch Company totaling $51,830 during 2020. When Birch was unable to meet Marks’
normal terms, Marks accepted from Birch a $60,000, 3-year non-interest-bearing note due 1/1/24. (Marks has accepted
notes in the past in settlement of open accounts.)
Required:
(a) Prepare Marks’
(b) Prepare a table which shows the amortization of bond discount over the life of the note.
(c) What is the 12/31/22
(d) What is the purpose of the journal entry at 12/31/22?
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