Implicit in the purchase price

Reference no: EM13986499

(Purchase of Computer with Zero-Interest-Bearing Debt) Cardinals Corporation purchased a computer on December 31, 2013, for $105,000, paying $30,000 down and agreeing to pay the balance in five equal installments of $15,000 payable each December 31 beginning in 2014. An assumed interest rate of 10% is implicit in the purchase price.

Instructions:

(Round to two decimal places.)

(a) Prepare the journal entry(ies) at the date of purchase.

(b) Prepare the journal entry(ies) at December 31, 2014, to r ecord the payment and interest (effective-interest method employed).

(c) Prepare the journal entry(ies) at December 31, 2015, to record the payment and interest (effective- interestmethod employed).

Reference no: EM13986499

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