LCD Industries purchased a supply of electronic components from Entel Corporatio
ID: 2490897 • Letter: L
Question
LCD Industries purchased a supply of electronic components from Entel Corporation on November 1, 2013. In payment for the $37 million purchase, LCD issued a 1-year installment note to be paid in equal monthly payments at the end of each month. The payments include interest at the rate of 12%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)
Prepare the journal entry for LCD’s purchase of the components on November 1, 2013. (Enter your answers in whole dollars. If no entry is required for a transaction, select "No journal entry required" in the first account field.)
Prepare the journal entry for the first installment payment on November 30, 2013. (Enter your answers in whole dollars. If no entry is required for a transaction, select "No journal entry required" in the first account field.)
LCD Industries purchased a supply of electronic components from Entel Corporation on November 1, 2013. In payment for the $37 million purchase, LCD issued a 1-year installment note to be paid in equal monthly payments at the end of each month. The payments include interest at the rate of 12%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)
Explanation / Answer
Ans1 Journal Entry Date Particular Dr. Cr 01.11.13 Electronic component Dr. 37000000 to Notes payable 37000000 ans2 Given Value 37000000 rate 12% No of month 12 Use PVT formula -32,87,405.18 Interest=37000000*1% 370000 Payment=3287405.18-370000=2917405 Journal Entry Date Particular Dr. Cr 30.11.13 Notes Payable DR. 2917405 Interest Expenses Dr. 370000 to Cash 3287405
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