Adventure land Incorporated purchased metal to build a new roller coaster on December 31, 2017. Adventure land

Question:

Adventure land Incorporated purchased metal to build a new roller coaster on December 31, 2017. Adventure land provided a $500,000 down payment and agreed to pay the balance in equal installments of $200,000 every December 31 for five years. Adventure land could have received a loan from the bank for this amount at 9% interest. Adventure land prepares financial statements in accordance with IFRS.

Instructions

(a) Using time value of money tables, a financial calculator, and computer spreadsheet functions, prepare the journal entries that would be recorded for the purchase and for the payments and interest on December 31, 2017, 2018, 2019, 2020, 2021, and 2022.

(b) From the lender's perspective, what are the advantages of an installment note compared with an interest-bearing note?

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...

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a 1 123117 Equipment 1277930 Cash 500000 Notes Payable 777930 To record purchase of raw material met...View the full answer

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Related Book For book-img-for-question

Intermediate Accounting

ISBN: 978-1119048541

11th Canadian edition Volume 2

Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Nicola M. Young, Irene M. Wiecek, Bruce J. McConomy

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Question Posted: Feb 28, 2017 11:16 AM

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Adventure land Incorporated purchased metal to build a new roller coaster on December 31, 2017. Adventure land

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a 1 123117 Equipment 1277930 Cash 500000 Notes Payable 777930 To record purchase of raw material met...View the full answer

Intermediate Accounting

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