On January 1, Indigo Corp. lent $28,000 to Teal Mountain Ltd., accepting Teal Mountain's $37,268, three-year, zero-interest-bearing note. The implied interest is 10%. (a) Prepare Indigo's journal entries for the initial transaction, recognition of interest each year assuming use of the effective interest method, and the collection of $37,268 at maturity. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.)
On January 1, Indigo Corp. lent $28,000 to Teal Mountain Ltd., accepting Teal Mountain's $37,268, three-year, zero-interest-bearing note. The implied interest is 10%. (a) Prepare Indigo's journal entries for the initial transaction, recognition of interest each year assuming use of the effective interest method, and the collection of $37,268 at maturity. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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13, please read the question carefully and follow the instructions. thanks
Transcribed Image Text:indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit
entries.)
Account Titles and Explanation
(To record initial transaction)
(To record interest income in the first year)
(To record interest income in the second year)
(To record interest income in the third year)
(To record collection at maturity)
Debit
Credit
[
Transcribed Image Text:On January 1, Indigo Corp. lent $28,000 to Teal Mountain Ltd., accepting Teal Mountain's $37,268, three-year, zero-interest-bearing
note. The implied interest is 10%.
(a) Prepare Indigo's journal entries for the initial transaction, recognition of interest each year assuming use of the effective interest
method, and the collection of $37,268 at maturity. (Credit account titles are automatically indented when the amount is entered. Do not
indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit
entries.)
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