Problem II1- Notes Receivable (20 points) On December 31, 2017 Bobby Corporation sold some ofits...
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Problem II1- Notes Receivable (20 points) On December 31, 2017 Bobby Corporation sold some ofits product to Fly Company, accepting four-year promissory 5% note having a maturity value of $2,000,000 (interest payable annually on ember 31 Bobby Corporation pays 8% for its borrowed funds. Fly Com pany, however, pays 10% for its borrowed funds. The product sold is carried on the books of Bobby at a manufactured cost of S650,000. Assume Bobby uses a perpetual inventory system. Instructions (a). Prepare the journal entries to record the transaction on the books of Bobby Corporation at December 31, 2017. (Assume that the effective interest method is used.) (b). Make all appropriate entries for 2018 on the books of Bobby Corporation PV ofan annuity due of 4 periods at 8% is 3.57710; at 10% is 3.48685 PV of an ordinary annuity of 4 periods at 8% is 331213; at 10% is 3.16086 PV ofa single sum of4 periods at 8% is 0.73503, at 10% is 0.6830
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