On January 1, 2017, Bonita Company makes the two following acquisitions. 1. Purchases land having a fair value of $310,000 by issuing a 4-year, zero-interest-bearing promissory note in the face amount of $470,602. 2. Purchases equipment by issuing a 6%, 9-year promissory note having a maturity value of $460,000 (interest payable annually). The company has to pay 11% interest for funds from its bank. (a) Record the two journal entries that should be recorded by Bonita Company for the two purchases on January 1, 2017. (b) Record the interest at the end of the first year on both notes using the effective-interest method.
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Ответ:
Explanation:
1. JOURNAL ENTRIES
1)
Dr Land310,000
Cr Discount on Notes Payable160,602
Cr Notes Payable 470,602
2)
Dr Equipment332,635
Cr Discount on Notes Payable127,365
Notes Payable 460,000
Calculation of equipment cost:
{($460,000*0.3909) + ($460,000*6%*5.5370)} = $179,814 + $152821 = $332,635
b)
1)
Dr Interest Expense (310,000*11%)34,100
Cr Discount on Notes payable 34,100
2)
Dr Interest Expense (332,635*11%)36,590
Cr Notes payable 8,990
Cr Cash (460,000*6%) 27,600
Ответ:
This is an example of the separation of powers.
Explanation: The three branches- legislative, executive, and judicial- all have their own specific roles with checks and balances intact to keep one branch from exercising too much power