On January 1, 2022, Slack Company finished legal services and accepted in exchange a 5% $400,000 promissory note with a due date of December 31, 2024. Interest is receivable on January 1 of each year. Notes with similar risk have a market rate of interest of 10%. Set financial calculators to zero decimal place. Required: (a) Determine the value of the following: N = Answer 1 Question 3 I/Y = Answer 2 Question 3 PMT = $Answer 3 Question 3 FV = $Answer 4 Question 3 (b) The present value of the note was $Answer 5 Question 3 (c) Prepare a Schedule of Note Discount/Premium Amortization for Slack Company under the effective interest method. Slack Company Schedule of Note Discount/Premium Amortization Effective Interest Method Date Cash Interest Amortized Amount Carrying Value of Note Jan 1, 2022 $Answer 6 Question 3 Dec 31, 2022 $Answer 7 Question 3 $Answer 8 Question 3 $Answer 9 Question 3 Answer 10 Question 3 Dec 31, 2023 Answer 11 Question 3 Answer 12 Question 3 Answer 13 Question 3 Answer 14 Question 3 Dec 31, 2024 Answer 15 Question 3 Answer 16 Question 3 Answer 17 Question 3 Answer 18 Question 3 (d) Prepare the journal entries on the following dates: Jan 1, 2022 Dr. Answer 19 Question 3 $Answer 20 Question 3 Cr. Answer 21 Question 3 $Answer 22 Question 3 Dec 31, 2022 Dr. Answer 23 Question 3 $Answer 24 Question 3 Dr. Answer 25 Question 3 $Answer 26 Question 3 Cr. Answer 27 Question 3 $Answer
On January 1, 2022, Slack Company finished legal services and accepted in exchange a 5% $400,000 promissory note with a due date of December 31, 2024. Interest is receivable on January 1 of each year. Notes with similar risk have a market rate of interest of 10%.
Set financial calculators to zero decimal place.
Required:
(a) Determine the value of the following:
N = Answer 1 Question 3
I/Y = Answer 2 Question 3
PMT = $Answer 3 Question 3
FV = $Answer 4 Question 3
(b) The present value of the note was $Answer 5 Question 3
(c) Prepare a Schedule of Note Discount/Premium Amortization for Slack Company under the effective interest method.
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Slack Company |
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Schedule of Note Discount/Premium Amortization |
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Effective Interest Method |
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Date |
Cash |
Interest |
Amortized Amount |
Carrying Value of Note |
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Jan 1, 2022 |
|
|
|
$Answer 6 Question 3 |
|
Dec 31, 2022 |
$Answer 7 Question 3 |
$Answer 8 Question 3 |
$Answer 9 Question 3 |
Answer 10 Question 3 |
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Dec 31, 2023 |
Answer 11 Question 3 |
Answer 12 Question 3 |
Answer 13 Question 3 |
Answer 14 Question 3 |
|
Dec 31, 2024 |
Answer 15 Question 3 |
Answer 16 Question 3 |
Answer 17 Question 3 |
Answer 18 Question 3 |
(d) Prepare the
Jan 1, 2022
|
Dr. Answer 19 Question 3 |
$Answer 20 Question 3 |
|
|
Cr. Answer 21 Question 3 |
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$Answer 22 Question 3 |
Dec 31, 2022
|
Dr. Answer 23 Question 3 |
$Answer 24 Question 3 |
|
|
Dr. Answer 25 Question 3 |
$Answer 26 Question 3 |
|
|
Cr. Answer 27 Question 3 |
|
$Answer |
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