Cardinals corporation purchased a computer on december 31

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Reference no: EM13481904

Cardinals Corporation purchased a computer on December 31, 2013, for $274,365, paying $78,390 down and agreeing to pay the balance in five equal installments of $39,195 payable each December 31 beginning in 2014. An assumed interest rate of 8% is implicit in the purchase price.

Prepare the journal entry at the date of purchase.

Date Account Titles Debit Credit

12/31/13

Equipment

Discount on Notes Payable

Notes Payable

Cash

Prepare the journal entry at December 31, 2014, to record the payment and interest (effective interest method employed).

Date Account Titles Debit Credit

12/31/14

Interest Expense

Notes Payable

Cash

Discounts on Notes Payable

Prepare the journal entry at December 31, 2015, to record the payment and interest (effective interest method employed).

Date Account Titles Debit Credit

12/31/15

Interest Expense

Notes Payable

Cash

Discounts on Notes Payable

Reference no: EM13481904

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