On December 30, 2005, Bart, Inc. purchased a machine from Fell Corp. in exchange for a non-interest bearing note requiring eight payments of $20,000. The first payment was made on December 30, 2005, and the others are due annually on December 30. At the date of issuance, the prevailing rate of interest for this type of note was 11%. Present value factors are as follows: Period The present value of an ordinary annuity of 1 at 11% The present value of the annuity in advance of 1 at 11% 7 4.712 5.231 8 5.146 5.712 On Bart's December 31, 2005 balance sheet, the note payable to Fell was $114,240 $104,620 $94,240 $102,920
On December 30, 2005, Bart, Inc. purchased a machine from Fell Corp. in exchange for a non-interest bearing note requiring eight payments of $20,000. The first payment was made on December 30, 2005, and the others are due annually on December 30. At the date of issuance, the prevailing rate of interest for this type of note was 11%. Present value factors are as follows: Period The present value of an ordinary annuity of 1 at 11% The present value of the annuity in advance of 1 at 11% 7 4.712 5.231 8 5.146 5.712 On Bart's December 31, 2005 balance sheet, the note payable to Fell was $114,240 $104,620 $94,240 $102,920
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
On December 30, 2005, Bart, Inc. purchased a machine from Fell Corp. in exchange for a non-interest bearing note requiring eight payments of $20,000. The first payment was made on December 30, 2005, and the others are due annually on December 30. At the date of issuance, the prevailing rate of interest for this type of note was 11%. Present value factors are as follows:
| Period | The present value of an ordinary annuity of 1 at 11% | The present value of the annuity in advance of 1 at 11% | ||
| 7 | 4.712 | 5.231 | ||
| 8 | 5.146 | 5.712 |
On Bart's December 31, 2005
|
|
$114,240 |
|
|
$104,620 |
|
|
$94,240 |
|
|
$102,920 |
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