Welton Corporation's installment note that has original principal of $26,000, interest of 5% compounded annually, and a term of 3 years. Welton Corporation established the note on the first day of its fiscal year and will fully repay the note by the end of year 3 on its December 31 fiscal year-end. Prepare Welton Corporation's journal entries on (a) January 1, Year 1; (b) December 31, Year 1; (c) December 31, Year 2; and (d) December 31, Year 3. (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 final answers to the nearest dollar amount.) No 1 2 | | 3 4 Transaction (a) (b) (c) (d) Answer is not complete. General Journal Cash Notes Payable (long-term) Interest Expense Notes Payable (long-term) Cash Interest Expense Notes Payable (long-term) Cash Interest Expense Notes Payable (long-term) Cash >> 333 >>> >>> ✓ ✓ Debit 26,000 1,300 > 1,303 x 26,065 x Credit 26,000 26,000 X 27,300 X 26,000 X 3 x 26,000 X 25,703 X

Welton Corporation's installment note that has original principal of $26,000, interest of 5% compounded annually, and a term of 3 years. Welton Corporation established the note on the first day of its fiscal year and will fully repay the note by the end of year 3 on its December 31 fiscal year-end. Prepare Welton Corporation's journal entries on (a) January 1, Year 1; (b) December 31, Year 1; (c) December 31, Year 2; and (d) December 31, Year 3. (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 final answers to the nearest dollar amount.) No 1 2 | | 3 4 Transaction (a) (b) (c) (d) Answer is not complete. General Journal Cash Notes Payable (long-term) Interest Expense Notes Payable (long-term) Cash Interest Expense Notes Payable (long-term) Cash Interest Expense Notes Payable (long-term) Cash >> 333 >>> >>> ✓ ✓ Debit 26,000 1,300 > 1,303 x 26,065 x Credit 26,000 26,000 X 27,300 X 26,000 X 3 x 26,000 X 25,703 X

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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Concept explainers

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.

Question

Welton Corporation's installment note that has original principal of $26,000, interest of 5% compounded annually, and a term of 3
years.
Welton Corporation established the note on the first day of its fiscal year and will fully repay the note by the end of year 3 on its
December 31 fiscal year-end. Prepare Welton Corporation's journal entries on (a) January 1, Year 1; (b) December 31, Year 1;
(c) December 31, Year 2; and (d) December 31, Year 3. (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 final answers to the nearest dollar
amount.)
No
1
2
3
4
Transaction
(a)
(b)
(c)
(d)
Cash
X Answer is not complete.
General Journal
Notes Payable (long-term)
Interest Expense
Notes Payable (long-term)
Cash
Interest Expense
Notes Payable (long-term)
Cash
Interest Expense
Notes Payable (long-term)
Cash
Debit
26,000
1,300
1,303
26,065
Credit
26,000
26,000 X
27,300X
26,000
3 x
26,000 X
25,703 X

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