Cardinals Corporation purchased a computer on December 31, 2016, for $105,000, p

Question

Cardinals Corporation purchased a computer on December 31, 2016, for $105,000, paying $30,000 down and agreeing to pay the balance in five equal Installments of $15,000 pa December 31 beginning in 2017. An assumed interest rate of 10% is implicit in the purchase price. Your answer is partially correct. Try again. Prepare the journal entry at the date of purchase. (Round factor values to 5 decimal places, e.g. ts1n4 and i oswver tor the account titles and enter o for the are automatically indented when amount is entered. Do not indent manually. If no entry is re quired, select "No Entry" for the account titles and enter 0 for the a Date Account Titles and Explanation Debit Credit December 31, 2016 |Equipment 99314 Discount on Notes Payable 7500 Notes Payable SHOW LIST OF ACCOUNTS Your answer is partially correct. Try again. nswers to 0 decimal places, e.g. 5,275. C Prepare the journal entry at December 31, 2017, to record the payment and interest (effective-inte cy policy I Wiley & Sons, Inc, All Rights Reserved. A Division of John Wiley

Explanation / Answer

Anuual installment 15000 Present value annuity factor i = 5 n = 10% 3.79079 Total amount 56862 (15000*3.79079) Annual payment Interest expense Notes payable Balance tranfer 31-Dec-16 56862 31-Dec-17 15000 5686 9314 47548 31-Dec-18 15000 4755 10245 37303 31-Dec-19 15000 3730 11270 26033 31-Dec-20 15000 2603 12397 13636 31-Dec-21 15000 1364 13636 0 31-Dec-16 Equipment 86862 Discount on notes payable 18138                Cash 30000                 Notes payable 75000 31-Dec-17 Interest expense 5686 Notes payable 15000                Cash 15000                Discount on notes payable 5686 31-Dec-18 Interest expense 4755 Notes payable 15000                Cash 15000                Discount on notes payable 4755

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