CONCEPTS IN FED.TAX.,2020-W/ACCESS
20th Edition
ISBN: 9780357110362
Author: Murphy
Publisher: CENGAGE L
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NEED FULL STEPS AND EXPLANATIONS PLS. WILL UPVOTE IF DONE PROPERLY
Transcribed Image Text:Вох 1
8 + A
For James, Box 1 = 8 +6 = 14
Q1. Bob the Builder purchases an equipment, which will last Boxl:
no residual value on April 1, Year 7. The company issues an $800,000, four-year, non-interest-
bearing note for the equipment when the prevailing market interest rate for notes of this nature is
8%. The company will pay off the note in four $200,000 installments on each March 31, starting
March 31, Year 8. The company adopts mid-month convention for depreciation and
depreciation expense is recognized once at the end of the fiscal year, which is December 31,
using straight-line method.
years with
раy
(1) Calculate depreciation expense to be recognized on December 31, Year 7.
(2) Prepare the journal entry related to note payable on March 31, Year 8.
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