question archive EXERCISES 15) Amortization schedule for note where stated interest rate differs from historical market rate of interest
EXERCISES 15) Amortization schedule for note where stated interest rate differs from historical market rate of interest
Subject:AccountingPrice: Bought3
EXERCISES 15) Amortization schedule for note where stated interest rate differs from historical market rate of interest. Hager Company acquires a computer from Volusia Computer Company. The cash price (fair value) of the computer is $37,938. Hager Company gives a three-year, interest-bearing note with a maturity value of $40,000. The note requires annual payments of 6% of face value, or $2,400 per year, payable at the end of each year. The interest rate implicit in the note is 8% per year.
a. Prepare an amortization schedule for the note similar to Exhibit 11.2.
b. Prepare journal entries for Hager Company over the life of the note. Ignore entries for depreciation expense on the computer.
