On September 1, 2017, Wildhorse Ltd. purchased equipment for $31,900 by signing a two-year note payable...

On September 1, 2017, Wildhorse Ltd. purchased equipment for $31,900 by signing a two-year note payable with a face value of $31,900 due on September 1, 2019. The going rate of interest for this level of risk was 6%. The company has a December 31 year end.

REQUIRED:

1. Calculate the cost of the equipment assuming the note is as follows. (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places,e e.g. 5,275.)

a.		An 6% interest-bearing note, with interest due each September 1.
b.		A 2% interest-bearing note, with interest due each September 1.
c.		A non–interest-bearing note.

2. Record all journal entries from September 1, 2017, to September 1, 2019, for an 6% interest-bearing note, with interest due each September 1st. Ignore depreciation of the equipment.

3. Record all journal entries from September 1, 2017, to September 1, 2019, for a 2% interest-bearing note, with interest due each September 1st. Ignore depreciation of the equipment.

4. Record all journal entries from September 1, 2017, to September 1, 2019, for a non–interest-bearing note. Ignore depreciation of the equipment.

Solutions

Expert Solution

ekkarill92 answered 8 months ago

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