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Problem 1On January 2, 20x8, the Todd Company acquired a truck with alist price of $400,000. The Todd Company's incremental borrowingrate is 8% (imputed rate). Assume that thetruck manufacturer is offering Todd the following terms (eachsituation is independent). For each of the terms, prepare thejournal entries for the life of the note. Assume a December 31 yearend.Todd company is a publicly accountable company.a) Todd Company has to make equal annual payments of principaland interest over five years. Payments are due on December 31 ofevery year. The interest rate charged is 10%.b) Todd Company pays the $400,000 in three years. No interest ischarged on the note.c) Todd Company pays the $400,000 in three years. Interest of 3%is charged on the note payable on December 31 of every year.d) Todd Company pays $80,000 on the principal at the end ofevery year, over 5 years. No interest is charged.e) Todd Company has to make equal annual payments of principaland interest over five years. The interest rate charged is 4%.