Fox Co. purchases land on January 1 of Year 1 and issues a 3-year, $70,000 zero-interest-bearing...

 

Transcribed Image Text:

Fox Co. purchases land on January 1 of Year 1 and issues a 3-year, $70,000 zero-interest-bearing note as payment. The market rate is 10%, and Fox Co. uses the effective interest method to amortize discounts and premiums. Required Stated Interest = 0% Stated Rate = 5% e. Repeat the requirements of parts a, b, and c with the stated interest on the note as 5%. e. (Part a: prepare a debt amortization schedule for the note) Note: Round your answers to the nearest whole dollar. Do not use negative signs with your answers. Date Cash Interest Expense Discount Amortization Note Payable, Net Jan. 1, Year 1 50,937 X Dec. 31, Year 1 $ 3,500 $ Dec. 31, Year 2 3,500- 7,000 x $ 7,000 x 0* 0x 7,000 x 0x Dec. 31, Year 3 3,500 7,000 x 1,167 x 1,167 $ 10,500 $ 21,000 $ 8,167 e. (Part b: prepare the entry for issuance of the note in exchange for land on January 1 of Year 1) Fox Co. purchases land on January 1 of Year 1 and issues a 3-year, $70,000 zero-interest-bearing note as payment. The market rate is 10%, and Fox Co. uses the effective interest method to amortize discounts and premiums. Required Stated Interest = 0% Stated Rate = 5% e. Repeat the requirements of parts a, b, and c with the stated interest on the note as 5%. e. (Part a: prepare a debt amortization schedule for the note) Note: Round your answers to the nearest whole dollar. Do not use negative signs with your answers. Date Cash Interest Expense Discount Amortization Note Payable, Net Jan. 1, Year 1 50,937 X Dec. 31, Year 1 $ 3,500 $ Dec. 31, Year 2 3,500- 7,000 x $ 7,000 x 0* 0x 7,000 x 0x Dec. 31, Year 3 3,500 7,000 x 1,167 x 1,167 $ 10,500 $ 21,000 $ 8,167 e. (Part b: prepare the entry for issuance of the note in exchange for land on January 1 of Year 1)