Prepare the journal entry for the sale of the equipment

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Question - On March 31, 2015, Grimy Corporation sold equipment by taking an $800,000, five year, non-interest bearing note, and also received cash of $200,000. The prevailing market rate for similar debt is 8%. Grimy will receive five equal yearly payments beginning on March 31, 2016. The company reports using IFRS. Assume that your year-end adjusting entries are reversed. You do not need to show the reversal entry.

a. Calculate the present value of the note in exact dollars and cents.

b. Prepare the journal entry for the sale of the equipment.

c. Prepare the necessary adjusting journal entries and the entries for receipt of the yearly payment for:

December 31, 2015

March 31, 2016

December 31, 2016

March 31 2017

Calculate and journalize amounts in exact dollars and cents. Round interest calculations to the nearest full month.

Reference no: EM133179285

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