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At January 1, 2018, Brant Cargo acquired equipment by issuing a five-year, $150,000 (payable at maturity),...

At January 1, 2018, Brant Cargo acquired equipment by issuing a five-year, $150,000 (payable at maturity), 4% note. The market rate of interest for notes of similar risk is 10%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. to 3. Prepare the necessary journal entries for Brant Cargo. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your final answers to nearest whole dollar.)

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Answer #1
Amount PV factor Present value
Interest 6000 3.79079 22745
Principal 150000 0.62092 93138
Total 115883
Debit Credit
January 1, 2018 Equipment 115883
Discount on notes payable 34117
       Note payable 150000
December 31, 2018 Interest expense 11588 =115883*10%
        Discount on notes payable 5588
        Cash 6000
December 31, 2019 Interest expense 12147 =(115883+11588)*10%
        Discount on notes payable 6147
        Cash 6000
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