Compute the effective interest rate on the note payable

Reference no: EM131421191

Memminger Corporation purchased equipment on January 1, 2012. The terms of the purchase required that the company pay $1,000 in interest at the end of each year for five years and $20,000 at the end of the fifth year. The FMV of the equipment on January 1, 2012, was $17,604.

REQUIRED:

a. Prepare the journal entry that would be recorded on January 1, 2012.

b. Compute the effective interest rate on the note payable.

c. Prepare the journal entry that would be recorded when the first interest payment is made on December 31, 2012.

d. Compute the net book value of the note payable as of December 31, 2012.

Reference no: EM131421191

Questions Cloud

Calculate the profitability index of the investment : Calculate the net present value of the investment in the new facility. Calculate the profitability index of the investment. Should Northeast Studios proceed with the investment? Why or why not?

Compute the effective interest rate on the bonds : Compare the market value of the bond investment to its book (balance sheet) value on May 31, 2012, assuming that market interest rates as of that date were 6 percent.

What are the four career issues in the new workplace facing : What are the four career issues in the new workplace facing managers today? Discuss one of the major challenges, highlighting its importance in the 21st century workplace and how it affects the behavior of people within organizations.

Vectors and scalar quantities : Identifying the vectors and scalar quantities from the following list {Temperature, force, displacement,velocity, speed, time, mass, acceleration}{Answer: "The vector are"..}

Compute the effective interest rate on the note payable : Prepare the journal entry that would be recorded when the first interest payment is made on December 31, 2012.

Lawn mower on a level lawn with a force : A man pushes a lawn mower on a level lawn with a force of 212N. If 41% of this force is directed downward, how much work is done by the man in pushing the mower 7.4m?

How were banks affected by the credit risks : What were some of the credit risks that arose from the 2008 financial crisis? How were banks affected by the credit risks? How were individuals and businesses affected by the credit risks

Direction of electric force exerted on third charge : Three charges are located in the corners of the right triangle as shown below. The sphere charges are q1=1.0nc, q2=4.0 and q3=6.0nc. (a) what is the magnitude and the direction of the electric force exerted on the third charge?

What is the difference between the mean of the two groups : What is the difference between the mean of the two groups? What is the difference is standard deviation? What is the null and alternative hypothesis? Do the data results lead you to reject or fail to reject the null hypothesis?

User Account

All Pages