On December 31, 2015, Yuna Inc., a publicly traded company, that manufactures and sells equipment, sold equipment to a customer on the following terms. The selling price of the equipment which is $600,000 will be payable as follows:15% immediately on December 31, 2015the remaining $510,000 will be paid in 5 years on December 31, 2020cash interest of 3% is payable annually on each December 31.Required:a. Prepare the journal entries for the years 2015 - 2017 assuming that the cash price of the equipment is $540,000. (Hint: The discount rate is not known.)b. For this part only assume Yuna follows ASPE and uses the straight line method for amortization of interest. Prepare the journal entry on December 31, 2016.
On December 31, 2015, Yuna Inc., a publicly traded company, that manufactures and sells equipment, sold equipment to a customer on the following terms. The selling price of the equipment which is $600,000 will be payable as follows:15% immediately on December 31, 2015the remaining $510,000 will be paid in 5 years on December 31, 2020cash interest of 3% is payable annually on each December 31.Required:a. Prepare the journal entries for the years 2015 - 2017 assuming that the cash price of the equipment is $540,000. (Hint: The discount rate is not known.)b. For this part only assume Yuna follows ASPE and uses the straight line method for amortization of interest. Prepare the journal entry on December 31, 2016.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On December 31, 2015, Yuna Inc., a publicly traded company, that manufactures and sells equipment, sold equipment to a customer on the following terms. The selling price of the equipment which is $600,000 will be payable as follows:15% immediately on December 31, 2015the remaining $510,000 will be paid in 5 years on December 31, 2020cash interest of 3% is payable annually on each December 31.Required:a. Prepare the journal entries for the years 2015 - 2017 assuming that the cash price of the equipment is $540,000. (Hint: The discount rate is not known.)b. For this part only assume Yuna follows ASPE and uses the straight line method for amortization of interest. Prepare the journal entry on December 31, 2016.
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