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This question was created from BE 14 = Intermediate Accounting 2 https://www.coursehero.com/file/23619123/BE-14-Intermediate-Accounting-2/

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Sophia Incorporated issued a $105,000, five-year, zero-interest-bearing note
to Angelica Corp. on January 1, 2017 and received $52,000 cash. Sophia uses
the effective interest method.
(a)
Using a financial calculator and computer spreadsheet functions, calculate
the implicit interest rate.
(b)
Prepare Sophia's journal entry for the January 1 issuance.
(c)
Prepare Sophia's journal entry for the December 31 recognition of interest.
(d)
Prepare an effective-interest amortization table for the note.

Top Answer

a) Implicit Interest Rate can be computed in Excel using function IRR as follows "=IRR(-52000,0,0,0,0,105000)"... View the full answer

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