Problem 7-9 On December 31, 2014, Oakbrook Inc. rendered services to Beghun Corp
ID: 2416695 • Letter: P
Question
Problem 7-9 On December 31, 2014, Oakbrook Inc. rendered services to Beghun Corporation at an agreed price of $109,562, accepting $43,500 down and agreeing to accept the balance in four equal installments of $21,750 receivable each December 31. An assumed interest rate of 12% is imputed. Prepare the entries that would be recorded by Oakbrook Inc. for the sale on December 31, 2014. (Assume that the effective-interest method is used for amortization purposes.) (Round answers to 0 decimal places, e.g. 5,275. 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 the amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit SHOW LIST OF ACCOUNTS LINK TO TEXT Prepare the entries that would be recorded by Oakbrook Inc. for the (a) receipts and (b) interest on December 31, 2015. (Assume that the effective-interest method is used for amortization purposes.) (Round answers to 0 decimal places, e.g. 5,275. 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 the amount is entered. Do not indent manually.) No. Account Titles and Explanation Debit Credit (a) (b) SHOW LIST OF ACCOUNTS LINK TO TEXT Prepare the entries that would be recorded by Oakbrook Inc. for the (a) receipts and (b) interest on December 31, 2016. (Assume that the effective-interest method is used for amortization purposes.) (Round answers to 0 decimal places, e.g. 5,275. 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 the amount is entered. Do not indent manually.) No. Account Titles and Explanation Debit Credit (a) (b) SHOW LIST OF ACCOUNTS LINK TO TEXT Prepare the entries that would be recorded by Oakbrook Inc. for the (a) receipts and (b) interest on December 31, 2017. (Assume that the effective-interest method is used for amortization purposes.) (Round answers to 0 decimal places, e.g. 5,275. 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 the amount is entered. Do not indent manually.) No. Account Titles and Explanation Debit Credit (a) (b) SHOW LIST OF ACCOUNTS LINK TO TEXT Prepare the entries that would be recorded by Oakbrook Inc. for the (a) receipts and (b) interest on December 31, 2018. (Assume that the effective-interest method is used for amortization purposes.) (Round answers to 0 decimal places, e.g. 5,275. 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 the amount is entered. Do not indent manually.) No. Account Titles and Explanation Debit Credit (a) (b) Click if you would like to Show Work for this question: Open Show Work
Explanation / Answer
Effective interest method: Year Beginning amortization Interest and principal payment Interest income Principal amount amortized Ending amortized cost 31st Dec.2015 $ 66,062 $ 21,750 $ 7,927 $ 13,823 $ 52,239 31st Dec.2016 $52,239 $ 21,750 $ 6,269 $ 15,481 $ 36,758 31st Dec.2017 $36,758 $21,750 $ 4,411 $ 17,339 $ 19,419 31st Dec.2018 $19,419 $21,750 $ 2,330 $ 19,420 $ (1) 31st Dec.2014 Cash Account 43500 Account Recievables 66062 Sales Account 109562 (Being sales made and cash received against and remaining amount receive in four equal installments.) 31st Dec.2015 Cash $ 21,750 Accounts Receivable $ 13,823 Interest income $ 7,927 (Being installment received and interest income earned recorded) 31st Dec.2016 Cash $ 21,750 Accounts Receivable $ 15,481 Interest income $ 6,269 (Being installment received and interest income earned recorded) 31st Dec.2017 Cash $ 21,750 Accounts Receivable $ 17,339 Interest income $ 4,411 (Being installment received and interest income earned recorded) 31st Dec.2018 Cash $ 21,750 Accounts Receivable $ 19,420 Interest income $ 2,330 (Being installment received and interest income earned recorded)