Zero interest bearing note jessica jackson corporation

Reference no: EM13600211

Zero Interest Bearing Note Jessica Jackson Corporation acquires machinery from South Company in exchange for a $20,000 non-interest bearing, 5-year note on June 30, 2013. The note is due on June 30, 2018. The machinery has a fair value of $11,348.54, is subject to straight-line depreciation, and has an estimated life of 10 years (no residual value). JJ Corporation fiscal year ends December 31.

Required:

a) What is the effective interest rate on this note?

b) Prepare journal entries on each of the following dates to record the preceding information for JJ Corporation. 1. June 30, 2013 2. December 31, 2013 3. December 31, 2014

Reference no: EM13600211

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