On January 1, Bramble Corp. lent $39,000 to Marin Inc., accepting Marins $51,909, three-year, zero-interest-bearing...
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Accounting
On January 1, Bramble Corp. lent $39,000 to Marin Inc., accepting Marins $51,909, three-year, zero-interest-bearing note. The implied interest is 10%.
Brambles journal entries for the initial transaction, recognition of interest each year assuming use of the effective interest method, and the collection of $51,909 at maturity.
Account Titles
Debit
Credit
(To record initial transaction)
(To record interest income in the first year)
(To record interest income in the second year)
(To record interest income in the third year)
(To record collection at maturity)
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