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Prepare the journal entry maple corp has to record on dec

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Reference no: EM132767531

Maple Corp. is planning to extend its business and therefore needs more office space. On January 1st , 2020, the manager is facing the decision to purchase a new space or rent a place. There are three options.

  1. Rent a space and make rental payments of $4,100 in cash every month (for 2 years). The annual interest rate is 12%.
  2. Rent a space and pay $48,000 upfront (today) for this year and pay $47,000 2 years from now. The annual interest rate is 12%. 
  3. Purchase a space by borrowing $670,000 on a 12%, 1-year interest-paying note (dated January 1st, 2020). The interest and principal will be paid on maturity (December 31, 2020).
  4. Maple Corp.'s fiscal year-end is December 31.

Problem 1: Maple Corp. decided to choose option (C). Prepare the journal entry Maple Corp. has to record on December 31, 2020.

Reference no: EM132767531

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