On December 31, 2025, Novak Company acquired a computer from Plato Corporation by issuing a $548,000.00 zero-interest-bearing note, payable in full on December 31, 2029. Novak Company's credit rating permits it to borrow funds from its several lines of credit at 10%. The computer is expected to have a 5-year life and a $64,000 salvage value. Click here to view factor tables. (a)
On December 31, 2025, Novak Company acquired a computer from Plato Corporation by issuing a $548,000.00 zero-interest-bearing note, payable in full on December 31, 2029. Novak Company's credit rating permits it to borrow funds from its several lines of credit at 10%. The computer is expected to have a 5-year life and a $64,000 salvage value. Click here to view factor tables. (a)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![On December 31, 2025, Novak Company acquired a computer from Plato Corporation by issuing a $548,000.00 zero-interest-bearing
note, payable in full on December 31, 2029. Novak Company's credit rating permits it to borrow funds from its several lines of credit
at 10%. The computer is expected to have a 5-year life and a $64,000 salvage value.
Click here to view factor tables.
(a)
✓ Your answer is correct.
Prepare the journal entry for the purchase on December 31, 2025. (Round present value factor calculations to 5 decimal places, e.g.
1.25124 and the final answers to 2 decimal places, e.g. 58,971.23. If no entry is required, select "No Entry" for the account titles and enter
O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit
entries before credit entries.)
(b)
Date
December
31, 2025
-
eTextbook and Media
List of Accounts
Date
December
31, 2026
Your answer is partially correct.
December
31, 2026
Date
12/31/25
Account Titles and Explanation
12/31/26
Equipment
12/31/27
Discount on Notes Payable.
12/31/28
Notes Payable
12/31/29
Prepare any necessary adjusting entries relative to depreciation (use straight-line) and amortization (use effective-interest
method) on December 31, 2026. (Round answers to 2 decimal places, e.g. 38,548.23. If no entry is required, select "No Entry" for the
account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent
manually. List all debit entries before credit entries.)
Account Titles and Explanation
Depreciation Expense
Accumulated Depreciation-Equipment
(To record the depreciation.)
Interest Expense
Discount on Notes Payable
(To amortize the discount.)
Schedule of Note Discount Amortization
Debit
Debit Interest Expense / Credit Discount
on Notes Payable
Debit
Carrying Value
of Note
374291
DODOL
173709
60457
Credit
37429
548,000
Attempts: 2 of 4 used
Credit
60457
37429](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc8f9a758-8b11-47fd-80dc-24eb38ddaef9%2F018ce11c-0e98-4260-8068-c686a908b2d3%2F75jvh6y_processed.png&w=3840&q=75)
Transcribed Image Text:On December 31, 2025, Novak Company acquired a computer from Plato Corporation by issuing a $548,000.00 zero-interest-bearing
note, payable in full on December 31, 2029. Novak Company's credit rating permits it to borrow funds from its several lines of credit
at 10%. The computer is expected to have a 5-year life and a $64,000 salvage value.
Click here to view factor tables.
(a)
✓ Your answer is correct.
Prepare the journal entry for the purchase on December 31, 2025. (Round present value factor calculations to 5 decimal places, e.g.
1.25124 and the final answers to 2 decimal places, e.g. 58,971.23. If no entry is required, select "No Entry" for the account titles and enter
O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit
entries before credit entries.)
(b)
Date
December
31, 2025
-
eTextbook and Media
List of Accounts
Date
December
31, 2026
Your answer is partially correct.
December
31, 2026
Date
12/31/25
Account Titles and Explanation
12/31/26
Equipment
12/31/27
Discount on Notes Payable.
12/31/28
Notes Payable
12/31/29
Prepare any necessary adjusting entries relative to depreciation (use straight-line) and amortization (use effective-interest
method) on December 31, 2026. (Round answers to 2 decimal places, e.g. 38,548.23. If no entry is required, select "No Entry" for the
account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent
manually. List all debit entries before credit entries.)
Account Titles and Explanation
Depreciation Expense
Accumulated Depreciation-Equipment
(To record the depreciation.)
Interest Expense
Discount on Notes Payable
(To amortize the discount.)
Schedule of Note Discount Amortization
Debit
Debit Interest Expense / Credit Discount
on Notes Payable
Debit
Carrying Value
of Note
374291
DODOL
173709
60457
Credit
37429
548,000
Attempts: 2 of 4 used
Credit
60457
37429
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