HOMEWORK ON LONG-TERM NOTES PAYABLE

HOMEWORK ON LONG-TERM NOTES PAYABLE - HOMEWORK ON LONG-TERM...

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HOMEWORK ON LONG-TERM NOTES PAYABLE Journalize the following: 1. Interest bearing: principal – lump sum, interest – annual; effective rate higher than the nominal rate Cameroon Company constructed for Virginia Distributors a warehouse that was completed and ready for occupancy on January 1, 2016. Virginia paid for the warehouse by issuing a P900,000 four–year note that required 7% interest to be paid on December 31 of each year. The warehouse was custom–built for Virginia, so its cash price was not known. By comparison with similar transactions, it was determined that an appropriate interest rate was 10%. 2. Interest bearing: principal – installment, interest – annual; effective rate same as the nominal rate Washington Company acquired a packaging machine from Cadbury Corporation. Cadbury completed the construction of the machine on January 1, 2016.
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