Required: (a) Determine the value of the following: N = I/Y = PMT= $ FV = $ (b) The present value of the note was $ (c) Prepare a Schedule of Note Discount/Premium Amortization for Ace Company under the effective interest method. Date Jan 1, 2022 Dec 31, 2022 Dec 31, 2023 Dec 31, 2024 Jan 1 2022 Ace Company Schedule of Note Discount/Premium Amortization Effective Interest Method Cash Interest Amortized Amount Carrying Value of Note $ (d) Prepare the journal entries on the following dates:
Required: (a) Determine the value of the following: N = I/Y = PMT= $ FV = $ (b) The present value of the note was $ (c) Prepare a Schedule of Note Discount/Premium Amortization for Ace Company under the effective interest method. Date Jan 1, 2022 Dec 31, 2022 Dec 31, 2023 Dec 31, 2024 Jan 1 2022 Ace Company Schedule of Note Discount/Premium Amortization Effective Interest Method Cash Interest Amortized Amount Carrying Value of Note $ (d) Prepare the journal entries on the following dates:
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:On January 1, 2022, Ace Company finished landscaping services and accepted in exchange a 10% $400,000 promissory note with a due date of
December 31, 2024. Interest is receivable at December 31 each year. Notes with similar risk have a market rate of interest of 5%.
Set financial calculator to zero decimal place.
Required:
(a) Determine the value of the following:
N =
I/Y =
PMT= $
FV = $
(b) The present value of the note was $
(c) Prepare a Schedule of Note Discount/Premium Amortization for Ace Company under the effective interest method.
Date
Jan 1, 2022
Dec 31, 2022
Dec 31, 2023
Dec 31, 2024
Jan 1, 2022
Dr.
Cr.
Dec 31, 2023
Dr.
Cr.
Cr.
Ace Company
Schedule of Note Discount/Premium Amortization
Effective Interest Method
$
Cash
$
Interest
$
Amortized
Amount
$
Carrying Value
of Note
$
(d) Prepare the journal entries on the following
dates:
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