The cost of the machine is recorded as the notes pv:
Dr equip 159,708
Cr payable 159,708
B. Even if the interest was not included in the face amount, it would still be discounted and recorded the same as A. A frequent example of this is coupon free treasury bonds.
Hi! i have a few more questions regarding this question.. I was wondering you could help me with
The first part of the problem has us write the journal entry Soriano would make to record the purchase with the interest included in the face note. DR machinery 159,708.40. DR Premium 40,291.60. CR 200,000
and to prepare the entry/entries required for the first payment.
I have.. DR Interest Expense 12,776. DR Premium 27224. CR Cash 40,000
The last part is How will Soriano's note appear on the 12/31/15 balance sheet?
would this be Note Payable of $160,000?
SO thats section A. Section B wants:
Assume that the interest is not included in the face amount of the note.
a. the cost of the machine
b. journal entry to record the purchase
c. entry/entries required for the first payment
d. presentation of the note on 12/31/15
if you could help me I would appreciate it very very much!!
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