Roberts Corporation purchased some equipment by issuing a $20,000 non-interest-bearing, four-year note when interest rates were 8%. Actuarial information for 8% and four periods follows: Future amount of 1 1.360 Present value of 1 0.735 In the entry to record this purchase, there would be a $5,300.00 credit to Discount on Notes Payable. $14,700.00 debit to Equipment. $27,210.88 credit to Notes Payable. $20,000 debit to Equipment.
Roberts Corporation purchased some equipment by issuing a $20,000 non-interest-bearing, four-year note when interest rates were 8%. Actuarial information for 8% and four periods follows: Future amount of 1 1.360 Present value of 1 0.735 In the entry to record this purchase, there would be a $5,300.00 credit to Discount on Notes Payable. $14,700.00 debit to Equipment. $27,210.88 credit to Notes Payable. $20,000 debit to Equipment.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Roberts Corporation purchased some equipment by issuing a $20,000 non-interest-bearing, four-year note when interest rates were 8%. Actuarial information for 8% and four periods follows:
In the entry to record this purchase, there would be a
| Future amount of 1 | 1.360 |
| Present value of 1 | 0.735 |
In the entry to record this purchase, there would be a
$5,300.00 credit to Discount on Notes Payable.
$14,700.00 debit to Equipment.
$27,210.88 credit to Notes Payable.
$20,000 debit to Equipment.
Expert Solution
Step 1
Formula:
Present value of Asset = Bond value x PV factor
Multiplying Bond value with PV factor derives the Present value of Asset.
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