On January 1, Year 1, Mission Company agreed to buy some equipment from Anna Company. Mission signed a non-interest-bearing note, agreeing to pay Anna $500,000 for the equipment on December 31, Year 3. The implied rate of interest for this note was 10%.
Record the journal entry for the purchase of this equipment for Mission Company on January 1, Year 1.
3. Contingent Liabilities - Warranties Start Chapter 9Journal Entry 1 | |||||
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Equipment | 375,650 | ||||
Discount | 124,350 | ||||
Note Payable | 500,000 |
Click Here to View All Chapter 8 Problems at Once | View | ||
1 | Liability Classification | Easy | |
2 | Contingent Liabilities | Moderate | |
3 | Contingent Liabilities - Warranties | Moderate | |
4 |
Purchasing with a Non-Interest Bearing Note
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Moderate |
1 | Interest Bearing Notes | 8:26 | |
2 | Non-interest Bearing Notes | 6:16 | |
3 | Contingencies | 5:58 | |
4 | What is Present Value | 8:15 | |
5 | Simple vs Compound | 14:41 | |
6 | PV of a Lump Sum | 4:39 | |
7 | PV of a Lump Sum | 6:09 | |
8 | Ordinary Annuity | 7:16 | |
9 | Purchasing with an Annuity | 4:31 | |
10 | Finding the Payment | 6:07 |