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(Entries for Zero-Interest-Bearing Notes) On January 1, 2011, McLean Company makes the two following acquisitions.
1. Purchases land having a fair market value of $300,000 by issuing a 5-year, zero-interest-bearing promissory note in the face amount of $505,518.
2. Purchases equipment by issuing a 6%, 8-year promissory note having a maturity value of $400,000 (interest payable annually). The company has to pay 11% interest for funds from its bank.
(a) Record the two journal entries that should be recorded by McLean Company for the two purchases on January 1, 2011.
(b) Record the interest at the end of the first year on both notes using the effective-interest method.
(Entries for Bond Transactions) On January 1, 2010, Osborn Company sold 12% bonds having a maturity value of $800,000 for $860,651.79, which provides the bondholders with a 10
Will the bond interest expense reported in 2011 be the same as, greater than, or less than the amount that would be reported if the straight-line method of amortization were u
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Identify the authoritative literature that provides guidance on the zero-interest-bearing note. Use some of the examples to explain how the standard applies in this setting.
Make the journal entry to record the bond issue described in event 3. Note that the bonds were issued on the same day, yet one was issued at a premium and the other at a disco
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