On January 1, 2024, the Ward Company purchased land from the Fisher Company in exchange for a $1,000,000 face value noninterest-bearing note payable, due in five equal installments of $200,000, with the first payment due December 31, 2024. The face value of the note includes interest and principal. There was no established interest rate for this note but the prevailing interest rate for similar notes is 12% APR. Present value factors from tables are listed below: Present value of single sum, 5 periods, 12% Present value of ordinary annuity, 5 periods, 12% Present value of annuity due, 5 periods, 12% Future value of single sum, 5 periods, 12% 0.56743 3.60478 4.03735 1.76234 Future value of ordinary annuity, 5 periods, 12% 6.35285 Instructions: Prepare the journal entries to record: (A) the issuance of the note payable on January 1, 2024, and (B) the first payment on December 31, 2024 and any amortization, assuming the effective interest rate method is used.

On January 1, 2024, the Ward Company purchased land from the Fisher Company in exchange for a $1,000,000 face value noninterest-bearing note payable, due in five equal installments of $200,000, with the first payment due December 31, 2024. The face value of the note includes interest and principal. There was no established interest rate for this note but the prevailing interest rate for similar notes is 12% APR. Present value factors from tables are listed below: Present value of single sum, 5 periods, 12% Present value of ordinary annuity, 5 periods, 12% Present value of annuity due, 5 periods, 12% Future value of single sum, 5 periods, 12% 0.56743 3.60478 4.03735 1.76234 Future value of ordinary annuity, 5 periods, 12% 6.35285 Instructions: Prepare the journal entries to record: (A) the issuance of the note payable on January 1, 2024, and (B) the first payment on December 31, 2024 and any amortization, assuming the effective interest rate method is used.

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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