Nicholas Company loaned $68,587 to Nathan, Inc. in exchange for Nathan’s 2-year, $80,000, zero-interest-bearing note. Nathan’s incremental...

Nicholas Company loaned $68,587 to Nathan, Inc. in exchange for Nathan’s 2-year, $80,000, zero-interest-bearing note. Nathan’s incremental borrowing rate for comparable debt is 8%.

Required:

Prepare an effective interest amortization schedule for Nicholas relative to this note. (Round to whole dollars.)

Prepare Nicholas’ journal entries for the initial loan transaction, recognition of interest each year, and the collection of the note at maturity.

Expert Solution

jeff jeffy answered 3 months ago

BE10.5 (LO 3) Garcia Corporation purchased a truck by issuing an $80,000, 4-year, zero-interest-bearing note to Equinox Inc

BE10.5 (LO 3) Garcia Corporation purchased a truck by issuing an $80,000, 4-year, zero-interest-bearing note to Equinox Inc. The market rate of interest for obligations of this nature is 10%. Prepare the journal entry to record the purchase of this truckBE10.6 (LO 3) Mohave Inc. purchased land, building, and equipment from Laguna Corporation for a cash payment of $315,000. The estimated fair values of the assets are land $60,000, building $220,000, and equipment $80,000. At what amounts should each of...

Marigold Corporation issued a 5-year, $80,000, zero-interest-bearing note to Brown Company on January 1, 2020, and received cash of $45,394.

Brief Exercise 14-11Marigold Corporation issued a 5-year, $80,000, zero-interest-bearing note to Brown Company on January 1, 2020, and received cash of $45,394. The implicit interest rate is 12%.Prepare Marigold’s journal entries for (a) the January 1 issuance and (b) the December 31 recognition of interest. (Round answers to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is...

1. On January 1, 2020, Ann Price loaned $223016 to Joe Kiger. A zero-interest-bearing note (face...

1. On January 1, 2020, Ann Price loaned $223016 to Joe Kiger. A zero-interest-bearing note (face amount, $305000) was exchanged solely for cash; no other rights or privileges were exchanged. The note is to be repaid on December 31, 2022. The prevailing rate of interest for a loan of this type is 11%. The present value of $305000 at 11% for three years is $223016. What amount of interest income should Ms. Price recognize in 2020? A. $24532 B. $33550...

On January 1, 2017, Harrison Inc. purchased land by issuing a 4-year, zero-interest-bearing note in the...

On January 1, 2017, Harrison Inc. purchased land by issuing a 4-year, zero-interest-bearing note in the face amount of $104,864. The company has to pay 7% interest for funds from its bank and has a December 31 fiscal year end. Prepare the following journal entries: January 1, 2017 December 31, 2017 December 31, 2018

7.61/ At the beginning of 2013, Gannon Company received a three-year zero-interest-bearing $1,000 trade note. The...

7.61/ At the beginning of 2013, Gannon Company received a three-year zero-interest-bearing $1,000 trade note. The market rate for equivalent notes was 8% at that time. Gannon reported this note as a $1,000 trade note receivable on its 2013 year-end statement of financial position and $1,000 as sales revenue for 2013. What effect did this accounting for the note have on Gannon's net earnings for 2013, 2014, 2015, and its retained earnings at the end of 2015, respectively? And explain...

On January 1, 2017, Headland Company issued a $1,264,500, 5-year, zero-interest-bearing note to Sage Bank. The...

On January 1, 2017, Headland Company issued a $1,264,500, 5-year, zero-interest-bearing note to Sage Bank. The note was issued to yield 8% annual interest. Unfortunately, during 2018 Headland fell into financial trouble due to increased competition. After reviewing all available evidence on December 31, 2018, Sage Bank decided that the loan was impaired. Headland will probably pay back only $843,000 of the principal at maturity. 1. Prepare journal entries for both Headland Company and Sage Bank to record the issuance...

On January 1, Bramble Corp. lent $39,000 to Marin Inc., accepting Marin’s $51,909, three-year, zero-interest-bearing note....

On January 1, Bramble Corp. lent $39,000 to Marin Inc., accepting Marin’s $51,909, three-year, zero-interest-bearing note. The implied interest is 10%. Bramble’s journal entries for the initial transaction, recognition of interest each year assuming use of the effective interest method, and the collection of $51,909 at maturity. Account Titles Debit Credit (To record initial transaction) (To record interest income in the first year) (To record interest income in the second year) (To record interest income in the third year) (To...

1. Flint Corporation issued a 4-year, $48,000, zero-interest-bearing note to Garcia Company on January 1, 2017,...

1. Flint Corporation issued a 4-year, $48,000, zero-interest-bearing note to Garcia Company on January 1, 2017, and received cash of $48,000. In addition, Flint agreed to sell merchandise to Garcia at an amount less than regular selling price over the 4-year period. The market rate of interest for similar notes is 12%. Prepare Flint Corporation’s January 1 journal entry. 2. At December 31, 2017, Wildhorse Corporation has the following account balances: Bonds payable, due January 1, 2026 $2,400,000 Discount on...

On January 1, 2019, Rubin Co. issued a 3-year non-interest-bearing note of $250,000 in exchange for...

On January 1, 2019, Rubin Co. issued a 3-year non-interest-bearing note of $250,000 in exchange for a custom-made machine for which there is no obvious market value. The appropriate discount rate is 5%. Prepare the journal entry to purchase this machine. Looking at the transaction above, how much interest expense would be recorded in 2019 by Rubin Co.?

Abbot Corp. issued a $270,000, three-year, zero-interest-bearing note payable to Athabasca Corp. for equipment on April...

Abbot Corp. issued a $270,000, three-year, zero-interest-bearing note payable to Athabasca Corp. for equipment on April 30, 2020. Abbot would normally pay interest at 6%. Abbot has a December 31 year-end and will repay the note with three equal yearly payments of $90,000. Abbot Corporation follows IFRS. Instructions Prepare the following journal entries for Abbot Corporation: Record the note December 31, 2020 interest accrual April 30, 2021 payment December 31, 2021 interest accrual April 30, 2022 payment As described in...

Question