Solution 1:
|
Journal Entries - American Food Services |
|
Date |
Particulars |
Debit |
Credit |
|
1-Jan-18 |
Equipment Dr |
$4,300,000.00 |
|
|
|
To Notes
payable |
|
$4,300,000.00 |
|
|
(To
record purchase of machine by issue of note) |
|
|
Solution 2:
Annual Installment amount = $4,300,000 / Cumulative PV factor at
9% for 4 periods
= $4,300,000 / 3.23972 = $1,327,275
|
Note Amortization Schedule |
|
Date |
Debit Interest expense |
Debit Notes Payable |
Credit Cash |
Carrying value of Note |
|
1-Jan-18 |
|
|
|
$4,300,000 |
|
31-Dec-18 |
$387,000 |
$940,275 |
$1,327,275 |
$3,359,725 |
|
31-Dec-19 |
$302,375 |
$1,024,900 |
$1,327,275 |
$2,334,825 |
|
31-Dec-20 |
$210,134 |
$1,117,141 |
$1,327,275 |
$1,217,685 |
|
31-Dec-21 |
$109,591 |
$1,217,684 |
$1,327,275 |
$0 |
Solution 3:
|
Journal Entries - American Food Services |
|
Date |
Particulars |
Debit |
Credit |
|
31-Dec-18 |
Interest
expense Dr |
$387,000.00 |
|
|
|
Notes
Payable Dr |
$940,275.00 |
|
|
|
To Cash |
|
$1,327,275.00 |
|
|
(To record installment payment) |
|
|
Solution 4:
|
Journal Entries - American Food Services |
|
Date |
Particulars |
Debit |
Credit |
|
31-Dec-20 |
Interest
expense Dr |
$210,134.00 |
|
|
|
Notes
Payable Dr |
$1,117,141.00 |
|
|
|
To Cash |
|
$1,327,275.00 |
|
|
(To record installment payment) |
|
|
