On January 1, 2020, Coleman Auto sold a Tracktor to Southern Energy in exchange for a 5-year zero-interest-bearing note with a face amount of $135,000, due January 1, 2025. Coleman’s credit rating makes it eligible to borrow money at 3% interest. Southern Energy’s credit rating makes it eligible to borrow money at 5% interest compounded annually from local banks. Coleman’s inventory records show the truck’s original cost at $80,000. Instructions: Record all business transactions for 2020 related to the Sale and Coleman’s accounting records, assuming Colemans has a December 31, 2020 year-end.
On January 1, 2020, Coleman Auto sold a Tracktor to Southern Energy in exchange for a 5-year zero-interest-bearing note with a face amount of $135,000, due January 1, 2025. Coleman’s credit rating makes it eligible to borrow money at 3% interest. Southern Energy’s credit rating makes it eligible to borrow money at 5% interest compounded annually from local banks. Coleman’s inventory records show the truck’s original cost at $80,000. Instructions: Record all business transactions for 2020 related to the Sale and Coleman’s accounting records, assuming Colemans has a December 31, 2020 year-end.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, 2020, Coleman Auto sold a Tracktor to Southern Energy in exchange for a 5-year zero-interest-bearing note with a face amount of $135,000, due January 1, 2025. Coleman’s credit rating makes it eligible to borrow money at 3% interest. Southern Energy’s credit rating makes it eligible to borrow money at 5% interest compounded annually from local banks. Coleman’s inventory records show the truck’s original cost at $80,000. Instructions: Record all business transactions for 2020 related to the Sale and Coleman’s accounting records, assuming Colemans has a December 31, 2020 year-end.
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