Scribd Logo
Upload

Welcome to Scribd!

  • 2

    Uploaded by

    Vajnerie Sitchon
    8 views2 pages
    North Company acquired machinery for $750,000 cash but paid $1,000,000. It paid $200,000 upfront and signed a 4-year noninterest bearing note for $800,000. On January 1, 2021 it recorded the machinery asset, discount on the note, cash payment, and note payable. On December 31, 2021 it recorded a $200,000 note payment and amortized $100,000 of the discount.

    Original Description:

    Copyright

    © © All Rights Reserved

    Available Formats

    XLSX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document
    North Company acquired machinery for $750,000 cash but paid $1,000,000. It paid $200,000 upfront and signed a 4-year noninterest bearing note for $800,000. On January 1, 2021 it recorded the machinery asset, discount on the note, cash payment, and note payable. On December 31, 2021 it recorded a $200,000 note payment and amortized $100,000 of the discount.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as xlsx, pdf, or txt
    8 views2 pages

    2

    Uploaded by

    Vajnerie Sitchon
    North Company acquired machinery for $750,000 cash but paid $1,000,000. It paid $200,000 upfront and signed a 4-year noninterest bearing note for $800,000. On January 1, 2021 it recorded the machinery asset, discount on the note, cash payment, and note payable. On December 31, 2021 it recorded a $200,000 note payment and amortized $100,000 of the discount.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as xlsx, pdf, or txt
    of 2

    Problem 8-6

    On January 1, 2021, North Company acquired a machinery with a cash price of P750,000 for P1,000,000.

    The entity paid P200,000 and signed a noninterest bearing promissory note for the balance which is payable in 4 equal installm

    Required:
    Prepare journal entries for 2021.

    Account Title Debit Credit


    Jan. 1 Machinery 750,000
    Discount on note payable 250,000
    Cash 200,000
    Note Payable 800,000

    Dec. 31 Note Payable 200,000


    Cash 200,000

    Interest Expense 100,000


    Discount on note payable 100,000

    Year Note Payable Fraction Amortization


    2021 800,000 8/20 100,000 (250,000 x 8/20)
    2022 600,000 6/20 75,000 (250,000 x 6/20)
    2023 400,000 4/20 50,000 (250,000 x 4/20)
    2024 200,000 2/20 25,000 (250,000 x 2/20)
    2,000,000 250,000
    ch is payable in 4 equal installments every December 31 of each year.

    (250,000 x 8/20)
    (250,000 x 6/20)
    (250,000 x 4/20)
    (250,000 x 2/20)

    You might also like