View History Bookmarks Window Help re-Built Problems Help conveyor for A&G; Ware

Question

View History Bookmarks Window Help re-Built Problems Help conveyor for A&G; Warehousers that was completed and ready for use on Braxton Technologies, Inc, constructed a A&G; paid for the conveyor by issuing a $100,000, and the note is to be repaid at the end of four years. The conweyor was custom-built for comparison with similar transactions it was determined that a reasonable interest rate was 10% drvas 51. EVAD of S1 and PVAD ot $0 (Use appropriate factor(s) from the tables provided.) four-year note that specified 4% interest to be paid on December 31 of eachyear, - A&G;, so its cash price was unknown. By Required: 1 Prepare the journal entry for A&G;'s purchase of the conveyor on January 1, 2018 2. Prepare an amortization schedule for the four-year term of the note. 3. Prepare the journal entry for A&G;'s third interest payment on December 31, 2020. 4. r A5Gs note had been an installment note to be paid in four equal payments at the end of each year beginning December 31, 2018, what would be the amount of each installment? g the instalment payment of required 4 Prepare an amortization schedule for the four-year term of the installment 6. Prepare the journal entry for A&G;'s third installment payment on December 31, 2020 Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Prepare the journal entry for A&G;'s purchase of the conveyor on January 1, 2018. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole doitlars.) ist View journal entry worksheet General Journal Credt 1January O 2018qoment Discount on notes payable

Explanation / Answer

Particulars DEBIT CREDIT 1 Equipment 80980 Discount on Notes payble 19020 Notes payable 100000 Interest = 4000 *3.16987 12679 Principal =100000 *0.68301 68301 Present value of Note 80980 *4000 is because of $100000 four year notes having 4% interest = $100000*4% =4000 *3.16987 is present value of ordinary Annuity of $1 and period (n) =4 and 10% interest *0.68301 is present value of $1 of period (n) =4 and 10% interest 2)   Year Cash payment Effective interest Increase in balance Outstanding Amount 80980 2018 4000 8098 4098 85078 2019 4000 8508 4508 89586 2020 4000 8959 4959 94544 2021 4000 9455 5455 100000 Total 16000 35020 19020 Effective interest = 80980 *10% = 8098 And 85078*10% = 8508 and So on Particulars DEBIT CREDIT 3) Interest expense 8959 Discount on Notes payble 4959 Cash 4000 4) Installment Payment = Amount of Loan /Present value of ordinary Anuuity of $1 for Period (n=4) And 10% = 80980/3.16987 25547 5) Year Cash payment Effective interest Decrease in balance Outstanding Amount 80980 2018 25547 8098 17449 63531 2019 25547 6353 19194 44338 2020 25547 4434 21113 23225 2021 25547 2322 23224 0 Total 102187 21207 80980 6) Particulars DEBIT CREDIT Interest expense 4434 Notes Payable 21113 Cash 25547

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