On January 1, 2025, Cullumber Company makes the two following acquisitions. 1. 2. Purchases land having a fair value of $290,000.00 by issuing a 4-year, zero-interest-bearing promissory note in the face amount of $440,240. Purchases equipment by issuing a 6%, 8-year promissory note having a maturity value of $430,000.00 (interest payable annually). The company has to pay 11% interest for funds from its bank. (a) (b) Click here to view factor tables. Record the two journal entries that should be recorded by Cullumber Company for the two purchases on January 1, 2025. Record the interest at the end of the first year on both notes using the effective-interest method. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final swer to 2 decimal places, e.g. 58,971.25. 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.)
On January 1, 2025, Cullumber Company makes the two following acquisitions. 1. 2. Purchases land having a fair value of $290,000.00 by issuing a 4-year, zero-interest-bearing promissory note in the face amount of $440,240. Purchases equipment by issuing a 6%, 8-year promissory note having a maturity value of $430,000.00 (interest payable annually). The company has to pay 11% interest for funds from its bank. (a) (b) Click here to view factor tables. Record the two journal entries that should be recorded by Cullumber Company for the two purchases on January 1, 2025. Record the interest at the end of the first year on both notes using the effective-interest method. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final swer to 2 decimal places, e.g. 58,971.25. 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.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Hw.191.
Transcribed Image Text:On January 1, 2025, Cullumber Company makes the two following acquisitions.
1.
2.
The company has to pay 11% interest for funds from its bank.
(a)
(b)
Click here to view factor tables.
No.
(a)
1.
Purchases land having a fair value of $290,000.00 by issuing a 4-year, zero-interest-bearing promissory note in the face
amount of $440,240.
(Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final swer to 2 decimal places, e.g. 58,971.25. 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.)
2.
Purchases equipment by issuing a 6%, 8-year promissory note having a maturity value of $430,000.00 (interest payable
annually).
(b)
1.
2.
Record the two journal entries that should be recorded by Cullumber Company for the two purchases on January 1, 2025.
Record the interest at the end of the first year on both notes using the effective-interest method.
Text
Date
January 1, 2025
January 1, 2025
December 31, 2025
December 31, 2025
Account Titles and Explanation
Land
Discount on Notes Payable
Notes Payable
Equipment
Discount on Notes Payable
Notes Payable
Interest Expense
Discount on Notes Payable
Interest Expense
Discount on Notes Payable
Cash
Debit
290000
430000
31900
25800
Transcribed Image Text:ate
2025
2025
31, 2025
31, 2025
✓
Account Titles and Explanation
Land
Discount on Notes Payable
Notes Payable
Equipment
Discount on Notes Payable
Notes Payable
Interest Expense
Discount on Notes Payable
Interest Expense
Discount on Notes Payable
Cash
Debit
290000
430000
DOI. MAN
31900
25800
Credit
DOADONNHORD
290000
430000
31900
25800
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