Reference no: EM132251794
Question - On December 31, 2018 Naaman Company accepted Twardus Company's $30,000 3-year note, paying 4 percent annually on December 31, as full payment for a specialty piece of equipment. The market rate of interest for similar notes is 6 percent. The following data is provided:
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Table Factors for 3 Periods
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Interest Rate
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4 percent
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6 percent
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Future Value of $1
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1.12486
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1.19102
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Present Value of $1
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0.8890
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0.83962
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Future Value of an Ordinary Annuity of $1
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3.1216
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3.1836
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Present Value of an Ordinary Annuity of $1
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2.77509
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2.67301
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(a) Determine the present value of the note (show calculations) and (2) make the appropriate journal entry for Naaman Company on December 31, 2018. Round answers to the nearest dollar.
(b) Make the appropriate entry for Naaman Company on December 31, 2019. Round answers to the nearest dollar. (Show calculations.) (You may calculate the interest revenue and discount as we did in class, or by using an amortization table as shown in the text.)
(c) Make the appropriate entry for December 31, 2020. Round answers to the nearest dollar. (Show calculations.)
(d) Make the appropriate entry for December 31, 2021, assuming the note (and interest) is paid in full on that date. (Show calculations.)