Lincoln Company purchased merchandise from Grandville Corp. on September 30, 201

Question

Lincoln Company purchased merchandise from Grandville Corp. on September 30, 2013. Payment was made in the form of a noninterest-bearing note requiring Lincoln to make six annual payments of $6,600 on each September 30, beginning on September 30, 2016. Required: Calculate the amount at which Lincoln should record the note payable and corresponding purchases on September 30, 2013, assuming that an interest rate of 10% properly reflects the time value of money in this situation. (Use PV of $1 and PVA of $1) (Round "PV Factors" to 5 decimal places, intermediate and final answer to the nearest dollar amount.)

Explanation / Answer

Solution:-

Lincoln should record the note payable and corresponding purchases on September 30, 2013 as $ 23755.97

Year Installment PVF @ 10% Payment PV 2013 1 2014 0.909091 $0.00 2015 0.826446 $0.00 2016 1 0.751315 $6,600.00 $4,958.68 2017 2 0.683013 $6,600.00 $4,507.89 2018 3 0.620921 $6,600.00 $4,098.08 2019 4 0.564474 $6,600.00 $3,725.53 2020 5 0.513158 $6,600.00 $3,386.84 2021 6 0.466507 $6,600.00 $3,078.95 Total $23,755.97

Related Questions

Navigate

• Browse (All)
• Browse L
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.