Exercise 14-6 - $250,000.00 Present value of $250,000 due...

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EXERCISE 14-16 (15–20 minutes) (a) 1. January 1, 2008 Land . ....................................................... 200,000.00 Discount on Notes Payable. .................. 137,012.00 Notes Payable. .............................. 337,012.00 (The $200,000 capitalized land cost represents the present value of the note discounted for five years at 11%.) 2. Equipment. .............................................. 185,674.30 Discount on Notes Payable. .................. 64,325.70* Notes Payable. .............................. 250,000.00
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EXERCISE 14-16 (Continued) *Computation of the discount on notes payable: Maturity value
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Unformatted text preview: $250,000.00 Present value of $250,000 due in 8 years at 11%$250,000 X .43393 $108,482.50 Present value of $15,000 payable annually for 8 years at 11% annually$15,000 X 5.14612 77,191.80 Present value of the note (185,674.30 ) Discount $ 64,325.70 (b) 1. Interest Expense. ................................. 22,000.00 Discount on Notes Payable. ...... 22,000.00 ($200,000 X .11) 2. Interest Expense. ................................. 20,424.17 ($185,674.30 X .11) Discount on Notes Payable. ...... 5,424.17 Cash ($250,000 X .06). ................ 15,000.00...
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This note was uploaded on 03/19/2008 for the course ACC 326 taught by Professor Atiase during the Spring '08 term at University of Texas at Austin.

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Exercise 14-6 - $250,000.00 Present value of $250,000 due...

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