On January 1, 2017, Flint Company makes the two following acquisitions. The comp
ID: 2409797 • Letter: O
Question
On January 1, 2017, Flint Company makes the two following acquisitions.
The company has to pay 12% interest for funds from its bank.
(Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
No.
Date
Account Titles and Explanation
Debit
Credit
January 1, 2017
January 1, 2017
December 31, 2017
December 31, 2017
1. Purchases land having a fair value of $300,000 by issuing a 5-year, zero-interest-bearing promissory note in the face amount of $528,703. 2. Purchases equipment by issuing a 6%, 9-year promissory note having a maturity value of $340,000 (interest payable annually on January 1).Explanation / Answer
Answer
date particulars debit credit jan 1 ,2017 land 300000 discount on not payable 228703 TO note payable 528703 jan 1, 2017 equipment 231303 discount on not payable 108697 TO note payable 340000 ( 340000*0.36061)+(340000*6%*5.32824)=231303 dec 31,2017 interest 36000 TO discount on note payable 36000 ( 300000 * 12 % ) dec 31,2017 interest expense 27756 TO cash 20400 (231303*12%)-(340000*6%)=7356