Present Values Use Present Value Tables or your calculator to complete the requirements below. Phillips Enterprises signed notes to make the following two purchases on January 1, 2020: new piece of equipment for $60,000, with payment deferred until December 31, 2021. The appropriate interest rate is 9% compounded annually. small building from Richter Construction. The terms of the purchase require a $75,000 payment at the end of each quarter, beginning March 31, 2020, and ending June 30, 2022. The appropriate interest rate is 2% per quarter. Required: Round your answers to the nearest cent, if rounding is required. 1. Complete the information needed to prepare a cash flow diagrams for these two purchases. a. n = years i = % per year Amount of Payment or Deposit 1/1/20 12/31/21 Unknown present value amount $ b. n = quarters i = % per quarter Amount of Payment or Deposit 1/1/20 3/31/20 6/30/20 9/30/20 6/30/22 Unknown present value amount $ $ $ . . . $ 2. Prepare the entries to record these purchases in Phillips' journal. 2020 Jan. 1 Equipment Notes Payable (Record purchase of equipment) 2020 Jan. 1 Building Notes Payable (Record purchase of building) 3. Prepare the cash payment and interest expense entries for Purchase b at March 31, 2020, and June 30, 2020. If an amount box does not require an entry, leave it blank. March 31, 2020 Interest Expense Notes Payable Cash (Record loan payment) June 30, 2020 Interest Expense Notes Payable Cash (Record loan payment) 4. Prepare the adjusting entry for Purchase a at December 31, 2020. Dec. 31, 2020 Interest Expense Notes Payable (Record accrued interest expense)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

Present Values

Use Present Value Tables or your calculator to complete the requirements below.

Phillips Enterprises signed notes to make the following two purchases on January 1, 2020:

new piece of equipment for $60,000, with payment deferred until December 31, 2021. The appropriate interest rate is 9% compounded annually.
small building from Richter Construction. The terms of the purchase require a $75,000 payment at the end of each quarter, beginning March 31, 2020, and ending June 30, 2022. The appropriate interest rate is 2% per quarter.

Required:

Round your answers to the nearest cent, if rounding is required.

1. Complete the information needed to prepare a cash flow diagrams for these two purchases.

a.	n =	years
	i =	% per year

Amount of Payment or Deposit	1/1/20	12/31/21
	Unknown present value amount	$

b.	n =	quarters
	i =	% per quarter

	Amount of Payment or Deposit
1/1/20	3/31/20	6/30/20	9/30/20		6/30/22
Unknown present value amount	$	$	$	. . .	$

2. Prepare the entries to record these purchases in Phillips' journal.

2020 Jan. 1	Equipment
	Notes Payable
	(Record purchase of equipment)
2020 Jan. 1	Building
	Notes Payable
	(Record purchase of building)

3. Prepare the cash payment and interest expense entries for Purchase b at March 31, 2020, and June 30, 2020. If an amount box does not require an entry, leave it blank.

March 31, 2020	Interest Expense
	Notes Payable
	Cash
	(Record loan payment)
June 30, 2020	Interest Expense
	Notes Payable
	Cash
	(Record loan payment)

4. Prepare the adjusting entry for Purchase a at December 31, 2020.

Dec. 31, 2020	Interest Expense
	Notes Payable
	(Record accrued interest expense)

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 5 steps with 5 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions