Exercise A3-18 (Algorithmic) Present Values

Use Present Value Tables or your calculator to complete the requirements below.

Ramon Company signed notes to make the following two purchases on January 1, 2020:

1. a new truck for $59,000, with payment deferred until December 31, 2021. The appropriate interest rate is 9% compounded annually.
2. a small building from Wandrow Builders. The terms of the purchase require a $75,000 payment at the end of each quarter, beginning March 31, 2020, and ending June 30, 2022. The appropriate interest rate is 2% per quarter.

Required:

Round your answers to the nearest cent, if rounding is required.

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1. Complete the information needed to prepare a cash flow diagrams for these two purchases.

a.	n =	fill in the blank b9afc9066049ff1_1 years
	i =	fill in the blank b9afc9066049ff1_2 % per year

Amount of Payment or Deposit	1/1/20	12/31/21
	Unknown present value amountUnknown future value amountUnknown present value amount	$fill in the blank b9afc9066049ff1_4

b.	n =	fill in the blank b9afc9066049ff1_5 quarters
	i =	fill in the blank b9afc9066049ff1_6 % per quarter

	Amount of Payment or Deposit
1/1/20	3/31/20	6/30/20	9/30/20		6/30/22
Unknown present value amountUnknown future value amount	$fill in the blank b9afc9066049ff1_8	$fill in the blank b9afc9066049ff1_9	$fill in the blank b9afc9066049ff1_10	. . .	$fill in the blank b9afc9066049ff1_11

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2. Prepare the entries to record these purchases in Ramon's journal.

a.	Accounts PayableCashInterest ExpenseTruckNote Payable	- Select -
	Accounts PayableCashTruckNote PayableNotes Receivable		- Select -
b.	BuildingCashInterest ExpenseNote PayableNotes Receivable	- Select -
	BuildingCashInterest ExpenseNote PayableNotes Receivable		- Select -

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3. Prepare the cash payment and interest expense entries for purchase b at March 31, 2020, and June 30, 2020. If an amount box does not require an entry, leave it blank.

March 31, 2020	Accounts ReceivableCashEquipmentInterest ExpenseInterest Payable	- Select -	- Select -
	Accounts PayableCashInterest PayableNote PayableNotes Receivable	- Select -	- Select -
	Accounts PayableCashInterest ExpenseInterest PayableNote Payable	- Select -	- Select -
June 30, 2020	Accounts ReceivableCashEquipmentInterest ExpenseInterest Payable	- Select -	- Select -
	Accounts PayableCashEquipmentNote PayableNotes Receivable	- Select -	- Select -
	Accounts PayableCashGain on Sale of EquipmentInterest ExpenseNote Payable	- Select -	- Select -

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4. Prepare the adjusting entry for purchase a at December 31, 2020.

Dec. 31, 2020	Accounts PayableCashInterest ExpenseInterest PayableNote Payable	- Select -
	Accounts PayableCashInterest ExpenseNote PayableNotes Receivable		- Select -