Use the present value and future value tables included in Appendix 8 and on the textbook companion website.
-If equipment is purchased by issuing a 10-year, $200,000 interest bearing note at a stated rate of 8 percent (payable annually), the transaction would be entered in the accounting records by crediting

Question

Use the present value and future value tables included in Appendix 8 and on the textbook companion website. 
-If equipment is purchased by issuing a 10-year, $200,000 interest bearing note at a stated rate of 8 percent (payable annually), the transaction would be entered in the accounting records by crediting

Quizplus · Accepted Answer

When equipment is purchased by issuing a 10-year, $200,000 interest-bearing note at a stated rate of 8% (payable annually), the accounting entry would be a debit to Equipment for $200,000 and a credit to Notes Payable for $200,000. This is because the note's stated rate of 8% is already factored in, and the payment schedule is structured to pay off both the principal and interest over the 10-year period. Therefore, the face value of the note payable is equal to the cost of the equipment.

Use the Present Value and Future Value Tables Included in Appendix