On January 1, 2020, Sweet Company makes the two following acquisitions.1. Purchases land having a fair value of $260,000 by issuing a 5-year, zero-interest-bearing promissory note in the face amount of $458,209.2. Purchases equipment by issuing a 6%, 9-year promissory note having a maturity value of $410,000 (interest payable annually).The company has to pay 12% interest for funds from its bank.(a) Record the two journal entries that should be recorded by Sweet Company for the two purchases on January 1, 2020.(b) 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 answer to 0 decimal places e.g. 58,971. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)No.DateAccount Titles and ExplanationDebitCredit(a) 1.January 1, 2020enter an account title to record the first purchase on January 1, 2017 enter a debit amount enter a credit amount enter an account title to record the first purchase on January 1, 2017 enter a debit amount enter a credit amount enter an account title to record the first purchase on January 1, 2017 enter a debit amount enter a credit amount 2.January 1, 2020enter an account title to record the second purchase on January 1, 2017 enter a debit amount enter a credit amount enter an account title to record the second purchase on January 1, 2017 enter a debit amount enter a credit amount enter an account title to record the second purchase on January 1, 2017 enter a debit amount enter a credit amount (b) 1.December 31, 2020to record the interest on the first note using the effective-interest method on December 31, 2017 enter a debit amount enter a credit amount to record the interest on the first note using the effective-interest method on December 31, 2017 enter a debit amount enter a credit amount 2.December 31, 2020to record the interest on the second note using the effective-interest method on December 31, 2017 enter a debit amount enter a credit amount to record the interest on the second note using the effective-interest method on December 31, 2017 enter a debit amount enter a credit amount to record the interest on the second note using the effective-interest method on December 31, 2017 enter a debit amount enter a credit amount

Journal entry: Business Transaction are recorded through Journals. Interest Expenses are the…

Answered: ) Record the two journal entries that…

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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On January 1, 2020, Sweet Company makes the two following acquisitions.

1.		Purchases land having a fair value of $260,000 by issuing a 5-year, zero-interest-bearing promissory note in the face amount of $458,209.
2.		Purchases equipment by issuing a 6%, 9-year promissory note having a maturity value of $410,000 (interest payable annually).

The company has to pay 12% interest for funds from its bank.

(a)		Record the two journal entries that should be recorded by Sweet Company for the two purchases on January 1, 2020.
(b)		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 answer to 0 decimal places e.g. 58,971. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

No.	Date	Account Titles and Explanation	Debit	Credit
(a) 1.	January 1, 2020	enter an account title to record the first purchase on January 1, 2017	enter a debit amount	enter a credit amount
		enter an account title to record the first purchase on January 1, 2017	enter a debit amount	enter a credit amount
		enter an account title to record the first purchase on January 1, 2017	enter a debit amount	enter a credit amount
2.	January 1, 2020	enter an account title to record the second purchase on January 1, 2017	enter a debit amount	enter a credit amount
		enter an account title to record the second purchase on January 1, 2017	enter a debit amount	enter a credit amount
		enter an account title to record the second purchase on January 1, 2017	enter a debit amount	enter a credit amount
(b) 1.	December 31, 2020	to record the interest on the first note using the effective-interest method on December 31, 2017	enter a debit amount	enter a credit amount
		to record the interest on the first note using the effective-interest method on December 31, 2017	enter a debit amount	enter a credit amount
2.	December 31, 2020	to record the interest on the second note using the effective-interest method on December 31, 2017	enter a debit amount	enter a credit amount
		to record the interest on the second note using the effective-interest method on December 31, 2017	enter a debit amount	enter a credit amount
		to record the interest on the second note using the effective-interest method on December 31, 2017	enter a debit amount	enter a credit amount

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) Record the two journal entries that should be recorded by Sweet Company for the two purchases on January 1, 2020. (b) Record the interest at the end of the first year on both notes using the effective-interest method.