On January 1, Pina Colada Corp. lent $38,000 to Kingbird, Inc., accepting Kingbird's $50,578, three-year, zero-interest-bearing note. The implied interest is 10%. (a) Prepare Pina's journal entries for the initial transaction, recognition of interest each year assuming use of the effective interest method, and the collection of $50,578 at maturity. (Credit account titles are automatically indented when 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.)

On January 1, Pina Colada Corp. lent $38,000 to Kingbird, Inc., accepting Kingbird's $50,578, three-year, zero-interest-bearing note. The implied interest is 10%. (a) Prepare Pina's journal entries for the initial transaction, recognition of interest each year assuming use of the effective interest method, and the collection of $50,578 at maturity. (Credit account titles are automatically indented when 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.)

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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