Recording Entries for Long-Term Note Receivable; Effective-Interest Method On January 1, 2020, Jacobs Company sells...
60.1K
Verified Solution
Link Copied!
Question
Accounting
Recording Entries for Long-Term Note Receivable; Effective-Interest Method
On January 1, 2020, Jacobs Company sells land financed through a $40,000 note, issued by Andress Company. The note is a $40,000, 8%, annual interest-bearing note. Andress agrees to repay the $40,000 proceeds on December 31, 2021. The prevailing interest rate on similar notes is 11%. Assume that the cost of the land is equal to the fair value of the note.
Required
Prepare all entries for Jacobs over the note term, including any year-end adjustments. Use the effective interest method to amortize the discount.
Date
Account Name
Dr.
Cr.
Jan. 1, 2020
?
?
?
?
?
?
Land
?
?
Dec. 31, 2020
Cash
?
?
?
?
?
?
?
?
Dec. 31, 2021
Cash
?
?
?
?
?
?
?
?
To record interest on note
Dec. 31, 2021
?
?
?
?
?
?
To record settlement of note
r the note term, including any year-end adjustments. Use the effective interest method to amortize the discount
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
