Megamind Inc. purchases equipment for $250000. They pay $50,000 cash and the supplier finances the remainder with a note. Terms are 2 years, no installment payments, full amount paid at the end of the 2 years, interest rate of 2%. Megamind’s interest rate for debt of a similar risk profile is 5%. Record the entries required for 2022 and 2023. The equipment was purchased on January 1, 2022. Show all steps. Use Date, Cash, Interest, Difference, and PV as headings for Amortization Schedule. Show and explain the difference between Net method and Gross Method.
Megamind Inc. purchases equipment for $250000. They pay $50,000 cash and the supplier finances the remainder with a note. Terms are 2 years, no installment payments, full amount paid at the end of the 2 years, interest rate of 2%. Megamind’s interest rate for debt of a similar risk profile is 5%. Record the entries required for 2022 and 2023. The equipment was purchased on January 1, 2022. Show all steps. Use Date, Cash, Interest, Difference, and PV as headings for Amortization Schedule. Show and explain the difference between Net method and Gross Method.
Chapter13: Long-term Liabilities
Section: Chapter Questions
Problem 1PA: On January 1, 2018, King Inc. borrowed $150,000 and signed a 5-year, note payable with a 10%...
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Megamind Inc. purchases equipment for $250000. They pay $50,000 cash and the supplier finances the remainder with a note. Terms are 2 years, no installment payments, full amount paid at the end of the 2 years, interest rate of 2%. Megamind’s interest rate for debt of a similar risk profile is 5%. Record the entries required for 2022 and 2023. The equipment was purchased on January 1, 2022.
Show all steps. Use Date, Cash, Interest, Difference, and PV as headings for Amortization Schedule. Show and explain the difference between Net method and Gross Method.
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