On January 1, Year 1, Mission Company agreed to buy some equipment from Anna Company. Mission signed a non-interest-bearing note, agreeing to pay Anna $500,000 for the equipment on December 31, Year 3. The implied rate of interest for this note was 10%.
Record the journal entry for the purchase of this equipment for Mission Company on January 1, Year 1.
3. Contingent Liabilities - Warranties Start Chapter 10| Journal Entry 1 | |||||
|---|---|---|---|---|---|
| Equipment | 375,650 | ||||
| Discount | 124,350 | ||||
| Note Payable | 500,000 | ||||
| Click Here to View All Chapter 9 Problems at Once | View | ||
| 1 | Liability Classification | Easy | |
| 2 | Contingent Liabilities | Moderate | |
| 3 | Contingent Liabilities - Warranties | Moderate | |
| 4 |
Purchasing with a Non-Interest Bearing Note
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Moderate |
| 1 | Notes Receivable | 11:27 | |
| 2 | Interest Bearing Notes | 8:26 | |
| 3 | Non-interest Bearing Notes | 6:16 | |
| 4 | Contingencies | 5:58 | |
| 5 | What is Present Value | 8:15 | |
| 6 | Simple vs Compound | 14:41 | |
| 7 | PV of a Lump Sum | 4:39 | |
| 8 | PV of a Lump Sum | 6:09 | |
| 9 | Ordinary Annuity | 7:16 | |
| 10 | Purchasing with an Annuity | 4:31 | |
| 11 | Finding the Payment | 6:07 |