Question

Current Attempt in Progress On January 1, 2020, Metlock Company makes the two following acquisitions. Purchases land having a fair value of $360,000 by issuing a 4-year, zero-interest-bearing promissory note in the face amount of $566,467 Purchases equipment by issuing a 7%, 9-year promissory note having a maturity value of $520,000 (interest payable annually). 1. 2. The company has to pay 12% interest for funds from its bank. Record the two journal entries that should be recorded by Metlock Company for the two purchases on January 1, 2020. Record the interest at the end of the first year on both notes using the effective-interest method, (a) (b) (Round present value factor calculations to 5 decimal places, c.8. 1.25124 and the final answer to decimal places e.g. 58,971. If no entry is required, select "No Entry" for the account titles and enter for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) No. Date Account Titles and Explanation Debit Credit

Answer 1

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Naming convention is not available, can be slightly different: Solution: Journal entries Date Debit Credit a) 1) Jan.01 360000 2020 206467 5664671 2) Jan.01 2020 3814661 138534) 520000 Account title and explaination Land Discount on note payable (plug) Notes payable (To record the purchase of land) Equipment (520000*0.36061)+(36400*5.32825) Discount on note payable (plug) Notes payable (To record the purchase of equipment) Interest Expense (360000"12%) Discount on note payable (To record the interest expense for first year) Interest Expense (381466*12%) Cash (520000*7%) Discount on note payable (plug) (To record the interest expense for first year) b)1 $ 43,200 Dec.31 2020 $ 43,200 2) Dec.31 45776 2020 36400 9376