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HW #5 - Prob. A - Required 1 Prepare the journal entry that...

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Homework #5 Problem A On December 31, 2011, Newton Consulting Company performed information technology consulting services for Blue Ridge Ice Cream Company. Blue Ridge was short of cash, and Newton agreed to accept a $220,000 note with a 2% stated interest rate due December 31, 2014 as payment in full. Blue Ridge is somewhat of a credit risk and typically borrows funds at a rate of 9%. Newton has outstanding credit and has various lines of credit at 5%.
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Unformatted text preview: Required: 1. Prepare the journal entry that Newton Consulting would record on December, 31, 2011 related to this transaction. 2. Assuming Newton’s fiscal year end is December 31, prepare the journal entry that Newton will record on December 31, 2012. 3. Prepare the journal entry that Newton will record on December 31, 2014, assuming Blue Ridge pays the note in full....
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