Gullible Company is a dealer in equipment. On December 31, 2019, the entity sold equipment in exchange
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Question:
Gullible Company is a dealer in equipment. On December 31, 2019, the entity sold equipment in exchange for a noninterest-bearing note requiring five annual payments of 500,000. The first payment was made on December 31, 2020. The market interest for similar notes was 8%. The relevant present values factors are:
PV of 1 at 8% for 5 periods 0.68
PV of an ordinary annuity of 1 at 8% for 5 periods 3.99
Required:
1. Prepare journal entries for 2017 and 2018.
2. Determine the carrying amount of the note receivable on December 31, 2018.
3. Determine the interest income for 2019.
Related Book For
College Accounting A Contemporary Approach
ISBN: 978-0077639730
4th edition
Authors: David Haddock, John Price, Michael Farina
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