Lincoln Company purchased merchandise from Grandville Corp. on September 30, 2021. Payment was made in the form
Question:
Lincoln Company purchased merchandise from Grandville Corp. on September 30, 2021. Payment was made in the form of a noninterest-bearing note requiring Lincoln to make six annual payments of $5,000 on each September 30, beginning on September 30, 2024.
Required:
Calculate the amount at which Lincoln should record the note payable and corresponding purchases on September 30, 2021, assuming that an interest rate of 10% properly reflects the time value of money in this situation.
Step by Step Answer:
PVA 5000 x 435526 21776 Present value of an ordinary annuity of 1 n 6 i 10 from Table 4 PV 21776 x 082645 17997 Present value of 1 n 2 i 10 from Table 2 Or alternatively From Table 4 PVA factor n 8 i ...View the full answer
Intermediate Accounting
ISBN: 978-1260481952
10th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson, Wayne Thomas
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The time value of money (TVM) is the concept that the money you have in your pocket today is worth more than the same amount would be if you received it in the future because of the profit it can earn during the interim.
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