Question

On December 31, 2020, Cheyenne Company acquired a computer from Plato Corporation by issuing a $609,000 zero-interest-bearing note, payable in full on December 31, 2024. Cheyenne Company’s credit rating permits it to borrow funds from its several lines of credit at 12%. The computer is expected to have a 5-year life and a $63,000 salvage value.

Prepare the journal entry for the purchase on December 31, 2020. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answers to 0 decimal places e.g. 58,971. 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 entered. Do not indent manually.)

Prepare any necessary adjusting entries relative to depreciation (use straight-line) and amortization (use effective-interest method) on December 31, 2021. (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 entered. Do not indent manually.)

Schedule of Note Discount Amortization
Date		Debit, Interest Expense Credit, Discount on Notes Payable		Carrying Amount of Note
12/31/20		$		$
12/31/21
12/31/22
12/31/23
12/31/24

Prepare any necessary adjusting entries relative to depreciation and amortization on December 31, 2022. (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 entered. Do not indent manually.)

Answer 1

Requirement 1:- Prepare the journal entry for the purchase on December 31, 2020.

Solution:-

Requirement 2:- Prepare any necessary adjusting entries relative to depreciation (use straight-line) and amortization (use effective-interest method) on December 31, 2021.

Solution:-

Schedule of Note Discount Amortization

Requirement 3:- Prepare any necessary adjusting entries relative to depreciation and amortization on December 31, 2022.

Solution:-

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