On January 1, 2024, Byner Company purchased a used tractor. Byner paid $2,000 down and signed a noninterest-bearing note requiring $29,000 to be paid on December 31, 2026. The fair value of the tractor is not determinable. An interest rate of 10% properly reflects the time value of money for this type of loan agreement. The company’s fiscal year-end is December 31. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Required: Prepare the journal entry to record the acquisition of the tractor. How much interest expense will the company include in its 2024 and 2025 income statements for this note? What is the amount of the liability the company will report in its 2024 and 2025 balance sheets for this note?
On January 1, 2024, Byner Company purchased a used tractor. Byner paid $2,000 down and signed a noninterest-bearing note requiring $29,000 to be paid on December 31, 2026. The fair value of the tractor is not determinable. An interest rate of 10% properly reflects the time value of money for this type of loan agreement. The company’s fiscal year-end is December 31. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Required: Prepare the journal entry to record the acquisition of the tractor. How much interest expense will the company include in its 2024 and 2025 income statements for this note? What is the amount of the liability the company will report in its 2024 and 2025 balance sheets for this note?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
On January 1, 2024, Byner Company purchased a used tractor. Byner paid $2,000 down and signed a noninterest-bearing note requiring $29,000 to be paid on December 31, 2026. The fair value of the tractor is not determinable. An interest rate of 10% properly reflects the time value of money for this type of loan agreement. The company’s fiscal year-end is December 31.
Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)
Required:
- Prepare the
journal entry to record the acquisition of the tractor. - How much interest expense will the company include in its 2024 and 2025 income statements for this note?
- What is the amount of the liability the company will report in its 2024 and 2025 balance sheets for this note?
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Transcribed Image Text:Req 1
Req 2 and 3
2. How much interest expense will the company include in its 2024 and 2025 income statements for this note?
3. What is the amount of the liability the company will report in its 2024 and 2025 balance sheets for this note?
Note: Do not round intermediate calculations. Round your answers to the nearest whole dollars.
2024
2025
2. Interest expense
3. Liability amount
Transcribed Image Text:Req 1
Prepare the journal entry to record the acquisition of the tractor.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round
intermediate calculations. Round your answers to the nearest whole dollars.
General Journal
No
1
Req 2 and 3
Transaction
1
Tractor
Discount on notes payable
Notes payable
Debit
Credit
29,000
Solution
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