Black Company is making plans to finance the following projects:
a. Purchase a boat for $50,000 to be repaid in equal monthly payments of $977.51 over the next six years. The bank has quoted an interest rate of 12%.
b. Purchase a property for $125,000. The seller would accept 10 semiannual payments of $15,411.37 at 8% (annual rate).
c. Sell some old equipment for $8,000. Black Company is willing to accept quarterly payments of $1,092 for the next two years at an interest rate of 8% (annual rate).
d. Purchase land and building for $250,000, with a down payment of $50,000, and semiannual payments of $16,048.52 for the next 10 years at an interest rate of 10% (annual rate).

For each situation, use the accounting equation to show how the firm would record the first two payments.

  • CreatedSeptember 01, 2014
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