Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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answer only number 4.

4. What is the carrying amount of note pay able ot
Problem 23-15 (AICPA Adapted)
On December 31, 2021, Bart Company purchased a machine
in exchange for a noninterest bearing note requiring eight
payments of P200,000.
The first payment was made on December 31, 2021 and
the others are due annually on December 31.
At date of issuance, the prevailing rate of interest for this
type of note was 11%.
PV of an ordinary annuity of 1 at 11% for 8 periods 5.146
PV of an annuity of 1 in advance at 11% for 8 periods 5.712
1. What amount should be recorded as initial cost of the
machine?
a. 1,600,000
b. 1,029,200
c. 1,400,000
d. 1,142,400
2. What amount should be recorded as discount on note
payable on December 31, 2021?
a. 657,600
b. 457,600
c. 570,800
d.
3. What amount should be recorded as interest expense for
2022?
а. 125,664
b. 103,664
с. 113,212
d. 176,000
December 31, 2022?
a. 942,400
b. 846,064
c. 742,400
d. 742,412
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Transcribed Image Text:4. What is the carrying amount of note pay able ot Problem 23-15 (AICPA Adapted) On December 31, 2021, Bart Company purchased a machine in exchange for a noninterest bearing note requiring eight payments of P200,000. The first payment was made on December 31, 2021 and the others are due annually on December 31. At date of issuance, the prevailing rate of interest for this type of note was 11%. PV of an ordinary annuity of 1 at 11% for 8 periods 5.146 PV of an annuity of 1 in advance at 11% for 8 periods 5.712 1. What amount should be recorded as initial cost of the machine? a. 1,600,000 b. 1,029,200 c. 1,400,000 d. 1,142,400 2. What amount should be recorded as discount on note payable on December 31, 2021? a. 657,600 b. 457,600 c. 570,800 d. 3. What amount should be recorded as interest expense for 2022? а. 125,664 b. 103,664 с. 113,212 d. 176,000 December 31, 2022? a. 942,400 b. 846,064 c. 742,400 d. 742,412
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