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On January 1, 2025, Marin Company loans $378,765 to Cullumber Corporation in exchange for a $450,000 zero-interest-bearing note payable in 2 years. The market rate of interest for a transaction of this nature for Cullumber is 9%. The present value of 1, 2 years out at 9% is 0.8417. Marin Company has a calendar year-end and it uses the effective-interest method.

On January 1, 2025, Marin Company loans $378,765 to Cullumber Corporation in exchange for a $450,000 zero-interest-bearing note payable in 2 years. The market rate of interest for a transaction of this nature for Cullumber is 9%. The present value of 1, 2 years out at 9% is 0.8417. Marin Company has a calendar year-end and it uses the effective-interest method.

FINANCIAL ACCOUNTING
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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Prepare the journal entry to recognize interest on 12/31/26 for Marin Company. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. List debit entry before credit entry.) Date Account Titles and Explanation 12/31/26 Discount on Notes Receivable Interest Revenue eTextbook and Media List of Accounts Debit Credit Assistance Used
Transcribed Image Text:Prepare the journal entry to recognize interest on 12/31/26 for Marin Company. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. List debit entry before credit entry.) Date Account Titles and Explanation 12/31/26 Discount on Notes Receivable Interest Revenue eTextbook and Media List of Accounts Debit Credit Assistance Used
On January 1, 2025, Marin Company loans $378,765 to Cullumber Corporation in exchange for a $450,000 zero-interest-bearing note payable in 2 years. The market rate of interest for a transaction of this nature for Cullumber is 9%. The present value of 1,2 years out at 9% is 0.8417. Marin Company has a calendar year-end and it uses the effective-interest method.
Transcribed Image Text:On January 1, 2025, Marin Company loans $378,765 to Cullumber Corporation in exchange for a $450,000 zero-interest-bearing note payable in 2 years. The market rate of interest for a transaction of this nature for Cullumber is 9%. The present value of 1,2 years out at 9% is 0.8417. Marin Company has a calendar year-end and it uses the effective-interest method.
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