On January 2, 2019, Jennings Company purchases machinery and equipment and borrows $200,000 on a 5-year non-interest-bearing
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On January 2, 2019, Jennings Company purchases machinery and equipment and borrows $200,000 on a 5-year non-interest-bearing note. The principal of $200,000 will be paid at the maturity date of December 31, 2023. To place a fair value on the transaction, the accountant will impute an interest rate and use that rate to compute the present value of the note. Assuming that an 8% interest rate is applicable, record the journal entry for interest expense for the year ended December 31, 2019.
MaturityMaturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...
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Related Book For
Intermediate Accounting Reporting and Analysis
ISBN: 978-1337788281
3rd edition
Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach
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