McCormick Corporation issued a 4-year, $40,000, 5% note to Greenbush Company on January 1, 2011, and received

Question:

McCormick Corporation issued a 4-year, $40,000, 5% note to Greenbush Company on January 1, 2011, and received a computer that normally sells for $31,495. The note requires annual interest payments each December 31. The market rate of interest for a note of similar risk is 12%. Prepare McCormick’s journal entries for

(a) The January 1 issuance and

(b) The December 31 interest.

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...