At the beginning of the year, Lambert Motors issued the three notes described be
ID: 2338400 • Letter: A
Question
At the beginning of the year, Lambert Motors issued the three notes described below. Interest is paid at year-end. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $) (Use appropriate factor(s) from the tables provided.) A The company issued a two-year, 10%, $610,000 note in exchange for a tract of land. The current market rte of interest is 10% B. Lombert acquired some office equipment with a fair value of $100,227 by issuing a one-year, $105,000 note. The stated interest on the note is 5% C. The company purchased a building by issuing a three-year installment note. The note is to be repaid in equal installments of $1 million per year beginning one year hence. The current market rate of interest is 8%. Required Prepare the journal entries to record each of the three transactions and the interest expense at the end of the first year for each. (If no entry is required for a transection/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Enter your answers in whole dollars.) View transaction list Journal entry worksheet Record the purchase of land in Situation A. Note: Encer debits before creditsExplanation / Answer
Date Description Debit Credit A Land 610,000 Note Payable 610,000 A Interest Expense 61,000 Cash 61,000 B Office Expense 100,227 Discount on note payable 4,773 Note Payable 105,000 B Interest expense 10,023 Discount on notes payable 4,773 Cash 105000*5% 5,250 C Building 2,577,000 Note Payable 2,577,000 2.577*1000000 PV of 10% for 3 years = 2.577 C Interest Expense 2577000*10% 257,700 Note Payable 742,300 Cash 1,000,000
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