The Webb Corporation purchased an asset from the Shaw Corporation on January 1, 2007. Shaw accepted a

Question:

The Webb Corporation purchased an asset from the Shaw Corporation on January 1, 2007. Shaw accepted a three-year, non-interest-bearing note of $18,000 due December 31, 2009 in exchange for the asset. Neither the fair value of the asset nor that of the note is available. Webb’s incremental borrowing rate is 12%.

Required

Prepare the journal entries to record the issuance of the note, retirement, and any interest expense on the books of Webb on each of the following dates:

1. January 1, 2007

2. December 31, 2007

3. December 31, 2008

4. December 31, 2009

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...