2) Boucher Ltd. (Boucher) sold equipment to Flynn Corporation (Flynn) for $450,000 on January 1, 2021....

 

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2) Boucher Ltd. (Boucher) sold equipment to Flynn Corporation (Flynn) for $450,000 on January 1, 2021. Flynn paid cash of $75,000 and signed a 7%, $375,000 note payable for the balance. The note payable is due in three equal instalments on December 31, 2021, 2022 and 2023. Each payment includes both principal and interest on the unpaid balance. Required (34 marks): (show all your calculations) a) Prepare the journal entry that Boucher would record on January 1, 2021 when this note is signed. b) Prepare the journal entry that Flynn would record on January 1, 2021 when this note is signed. c) What is the amount of the equal annual payment that Flynn must make each year? Show how you calculated this amount. d) What is the total amount of interest on the note over the period of the three years? Show how you calculated this amount. e) Complete the following table: Debt Payment Schedule Cash Interest Unpaid Date Payment Expense Decrease in Principal Principal Jan.1/20 Dec.31/20 Dec.31/21 Dec.31/22 Total f) Prepare the journal entry for each of the three payments that Flynn will record. g) Is interest expense increasing or decreasing over time? Why? 1 2) Boucher Ltd. (Boucher) sold equipment to Flynn Corporation (Flynn) for $450,000 on January 1, 2021. Flynn paid cash of $75,000 and signed a 7%, $375,000 note payable for the balance. The note payable is due in three equal instalments on December 31, 2021, 2022 and 2023. Each payment includes both principal and interest on the unpaid balance. Required (34 marks): (show all your calculations) a) Prepare the journal entry that Boucher would record on January 1, 2021 when this note is signed. b) Prepare the journal entry that Flynn would record on January 1, 2021 when this note is signed. c) What is the amount of the equal annual payment that Flynn must make each year? Show how you calculated this amount. d) What is the total amount of interest on the note over the period of the three years? Show how you calculated this amount. e) Complete the following table: Debt Payment Schedule Cash Interest Unpaid Date Payment Expense Decrease in Principal Principal Jan.1/20 Dec.31/20 Dec.31/21 Dec.31/22 Total f) Prepare the journal entry for each of the three payments that Flynn will record. g) Is interest expense increasing or decreasing over time? Why? 1

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Solutiona Journal entry in the book of boucher on j... View the full answer