E14-5 FV=600,000 n=3 PV= 427,068 i=12% Journal entries Jan 1/12 Land 427,068 Note payable 427,068 Dec 31/12 Interest expense 51248 Note payable 51248 Discuss: As we see, for this transaction, the land exchange by the notes with present value is 427,068 which is higher than the assessed value of land (390,000). It indicates that the land was bought with the price higher than its value at the point of exchange. b/ Prepare journal entries for transaction and interest…
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