Question

1. On 12/1/19, Led Zeppelin Corp. borrowed $120,000 by issuing a one-year, 10% note payable. Record...

1. On 12/1/19, Led Zeppelin Corp. borrowed $120,000 by issuing a one-year, 10% note payable. Record the necessary journal entries for the following dates:

12/31/2019

12/1/2020

2. Hollies Corp. is budgeting for the acquisition of land in the future. It can invest $200,000 today at 12%. How much cash will it have for land acquisitions at the end of six years?

Homework Answers

Answer #1

Req. 1 Journal Entry:

Date Account Name Debit Credit
12/ 1/19 Cash $120,000
Note Payable $120,000
( to record issuing of note payable)
12/1/20 Note Payable $120,000
Interest Expense( $120,000×10%) $12,000
Cash $132,000
( To record payment of note and interest expense)

Req . 2 Future Value:

$ 394,764

Explanation:

1) Pv : $200,000

2) I : 12%

3) N = 6 year

4) Use table Fv Of $ 1

5) Factor from table ( i= 12% ; n = 6 ) = 1.97382

6) Fv:

= Pv × Factor

= $ 200,000 × 1.97382

= $ 394,764

Value at the end of six year would be $ 394,764

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