On January 1 of Year 1, Stealth Company sold a machine (classified as inventory) that had a list price of $18,000 The customer paid $3,000 cash and signed a three-year, $15,000 note that specified a stated rate of 3%. Annual interest on the full amount of the principal is payable each December 31. The principal is payable on December 31, three years later. The market rate for a note of this risk is 10% Required a. Compute the present value of this note. b. Prepare an effective interest schedule for this note c. Prepare entries required by Stealth for this note on January 1 of Year 1, and December 31 of Year 1, Year 2, and Year 3 Note: Round answers to the nearest whole dollar. a. Present value of notes 12.389
On January 1 of Year 1, Stealth Company sold a machine (classified as inventory) that had a list price of $18,000 The customer paid $3,000 cash and signed a three-year, $15,000 note that specified a stated rate of 3%. Annual interest on the full amount of the principal is payable each December 31. The principal is payable on December 31, three years later. The market rate for a note of this risk is 10% Required a. Compute the present value of this note. b. Prepare an effective interest schedule for this note c. Prepare entries required by Stealth for this note on January 1 of Year 1, and December 31 of Year 1, Year 2, and Year 3 Note: Round answers to the nearest whole dollar. a. Present value of notes 12.389
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Please do not give solution in image format ? And Fast Answering Please And Explain Proper Step by Step.
Transcribed Image Text:Date
Jan. 1, Year 11
Dec. 31, Year 1
Dec. 31, Year 2
Dec. 31, Year 3
Dec. 31, Year 3
To record sale of equipment.
Account Name
To record interest on note.
To record interest on note.
To record interest on note.
To record settlement of note.
Show Transcribed Text
i need help with the journal entries
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Transcribed Image Text:On January 1 of Year 1, Stealth Company sold a machine (classified as inventory) that had a list price of $18,000. The customer paid $3,000 cash and signed a three-year. $15,000 note that specified a
stated rate of 3%. Annual interest on the full amount of the principal is payable each December 31. The principal is payable on December 31, three years later. The market rate for a note of this risk is 10%.
Required
a. Compute the present value of this note
b. Prepare an effective interest schedule for this note
c. Prepare entries required by Stealth for this note on January 1 of Year 1, and December 31 of Year 1, Year 2, and Year 3.
Note: Round answers to the nearest whole dollar
a. Present value of note: $ 12.389
Date
Cash Interest Revenue Discount en N.R. Note Receivable, Net
(Stated Interest) (Market Interest) Amortization
Jan 1, Year
Dec 31, Year 1 $
Dec 31, Year 2
Dec 31, Year 3
Toul
450
450
450✔
1,350
1.239
1318
1,405✓
39421
781
AGE
955✓
2612
(Carrying Value)
12.309
13178
14,046
15.001
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