Exercise 10-9 (Algo) Acquisition cost; noninterest-bearing note [LO10-3]On January 1, 2021, Byner Company purchased a used tractor. Byner paid $4,000 down and signed a noninterest-bearing noterequiring $41,000 to be paid on December 31, 2023. The fair value of the tractor is not determinable. An interest rate of 12% properlyreflects the time value of money for this type of loan agreement. The company's fiscal year-end is December 31. (FV of $1, PV of $1,FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)Required:1. Prepare the journal entry to record the acquisition of the tractor.2. How much interest expense will the company include in its 2021 and 2022 income statements for this note?3. What is the amount of the liability the company will report in its 2021 and 2022 balance sheets for this note?O Answer is not complete.Complete this question by entering your answers in the tabs below.Req 1Req 2 and 3Prepare the journal entry to record the acquisition of the tractor. (If no entry is required for a transaction/event, select "Nojournal entry required" in the first account field. Do not round intermediate calculations. Round your answers to the nearestwhole dollars.)NoTransactionGeneral JournalDebitCredit1Tractor25,510 XDiscount on notes payable6,4564,000Cash41,000Notes payable

Given: Byner paid=$4,000 non-interest bearing note requiring=$41,000 Interest rate=12%

Answered: ner Company p paid on Decem of money…

Business

Accounting

ner Company p paid on Decem of money for thi JAD of $1 and P

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

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Exercise 10-9 (Algo) Acquisition cost; noninterest-bearing note [LO10-3]
On January 1, 2021, Byner Company purchased a used tractor. Byner paid $4,000 down and signed a noninterest-bearing note
requiring $41,000 to be paid on December 31, 2023. The fair value of the tractor is not determinable. An interest rate of 12% properly
reflects the time value of money for this type of loan agreement. The company's fiscal year-end is December 31. (FV of $1, PV of $1,
FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)
Required:
1. Prepare the journal entry to record the acquisition of the tractor.
2. How much interest expense will the company include in its 2021 and 2022 income statements for this note?
3. What is the amount of the liability the company will report in its 2021 and 2022 balance sheets for this note?
O Answer is not complete.
Complete this question by entering your answers in the tabs below.
Req 1
Req 2 and 3
Prepare the journal entry to record the acquisition of the tractor. (If no entry is required for a transaction/event, select "No
journal entry required" in the first account field. Do not round intermediate calculations. Round your answers to the nearest
whole dollars.)
No
Transaction
General Journal
Debit
Credit
1
Tractor
25,510 X
Discount on notes payable
6,456
4,000
Cash
41,000
Notes payable

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