Prepare the journal entry on march

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Q1. On March 1, 2021, Lease Inc. issued a 5-year, zero-interest-bearing note with a $500,000 face value to Retail Co. receiving $500,000 cash from them. Lease also gave Retail the right to rent store space for 5 years. Interest rates for notes of this type were 6% at issue. Prepare the journal entry on March 1 for Lease Co. to record the note issuance.

Q2. On July 1, 2020, Client Ltd. issued a $150,000 face value note due June 30, 2023 with a stated interest rate of 4% to Consultants Inc. in return for consulting services they provided to them in 2020. The value of the consulting services is not readily determinable and the note is not readily marketable. On the basis of a credit analysis, a reasonable imputed interest rate would be 8%. Prepare the journal entry on July 1 for Client Ltd. to record the note issuance.

Reference no: EM132986398

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