New Brunswick Inc. is a reliable, long-term customer of Halifax Corporation. Due to the unexpected costs of
Question:
New Brunswick Inc. is a reliable, long-term customer of Halifax Corporation. Due to the unexpected costs of rapid expansion, New Brunswick Inc. was unable to pay its account receivable when it came due on January 1, 2021. Halifax Corporation agreed to accept a $182,000 non-interest bearing note that would be due on January 1, 2023. This type of financing would typically have an interest rate of 12%. Assume that Halifax Corporation uses the effective interest method to account for its non-interest bearing notes.
Required:
Calculate the amount at which to record the note receivable on January 1, 2021.
Prepare the journal entry for the note for Halifax Corporation on January 1, 2021.
Prepare the journal entries for the note for Halifax Corporation on its year ends of December 31, 2021 and December 31, 2022.
Financial Accounting Tools for Business Decision Making
ISBN: 978-1119368458
7th Canadian edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso, Barbara Trenholm, Wayne Irvine