On January 1, 2014, Fisher Company makes the two following acquisitions Purchases land having a fair market value of $800, 000 by issuing a 5-year, zero - interest - bearing promissory note in the face amount of $1, 175, 464. 6 Purchases equipment by issuing a 4%, 8-year promissory note having a maturity value of $350,000 (interest payable annually). The company has to pay 8% interest for funds from its bank. (a) Record the two journal entries that should be recorded by Fisher Company for the two purchases on January 1, 2014. (b) Record the interest at the end of the first two years on both notes using the effective interest method.

On January 1, 2014, Fisher Company makes the two following acquisitions Purchases land having a fair market value of $800, 000 by issuing a 5-year, zero - interest - bearing promissory note in the face amount of $1, 175, 464. 6 Purchases equipment by issuing a 4%, 8-year promissory note having a maturity value of $350,000 (interest payable annually). The company has to pay 8% interest for funds from its bank. (a) Record the two journal entries that should be recorded by Fisher Company for the two purchases on January 1, 2014. (b) Record the interest at the end of the first two years on both notes using the effective interest method.

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter15: Investments And Fair Value Accounting

Section: Chapter Questions

Problem 1E: Parilo Company acquired 170,000 of Makofske Co., 5% bonds on May 1, 2016, at their face amount....

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Parilo Company acquired 170,000 of Makofske Co., 5% bonds on May 1, 2016, at their face amount. Interest is paid semiannually on May 1 and November 1. On November 1, 2016, Parilo Company sold 50,000 of the bonds for 96. Journalize entries to record the following: a. The initial acquisition of the bonds on May 1. b. The semiannual interest received on November 1. c. The sale of the bonds on November 1. d. The accrual of 1,000 interest on December 31, 2016.
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