Cardinals Corporation purchased a computer on December 31, 2013, for $324,870, p
ID: 2467385 • Letter: C
Question
Cardinals Corporation purchased a computer on December 31, 2013, for $324,870, paying $92,820 down and agreeing to pay the balance in five equal installments of $46,410 payable each December 31 beginning in 2014. An assumed interest rate of 9% is implicit in the purchase price. Prepare the journal entry at the date of purchase. (Round answers to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round factor values to 5 decimal places, e.g. 1.25124.) Prepare the journal entry at December 31, 2014, to record the payment and interest (effective interest method employed). (Round answers to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Prepare the journal entry at December 31, 2015, to record the payment and interest (effective interest method employed). (Round answers to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)Explanation / Answer
debit credit 31-Dec-13 equipment 324870 discount on notes payable 0 0 cash 92820 notes payable 232050 debit credit 31-Dec-14 Notes payable 42578 interest expense 3832 cash 46410 discount on notes payable 0 0 debit credit 31-Dec-15 Notes payable 42578 interest expense 3832 cash 46410 discount on notes payable 0 0