II. Notes Payable. Rubio Company had the following borrowing activity. Rubio has a borrowing rate of...

50.1K

Verified Solution

Question

Accounting

II. Notes Payable. Rubio Company had the following borrowingactivity. Rubio has a borrowing rate of 6 percent on its otherdebt.
A. On June 30, 2016, Rubio issued a non-interest bearing, 10year note of $50,000 to acquire land for expansion.
1. Calculate the cash equivalent price of the land (assuming 6%is the market rate).
2. Prepare the journal entry to record the acquisition on June30.
B. On January 1, 2016, Rubio acquired equipment by issuing an$80,000, 2 percent (low-interest bearing), 5 year note, withinterest paid annually, starting December 31, 2016.
1. Calculate the cash equivalent price of the equipment(assuming 6% is the market rate).
2. Prepare the journal entry to record the acquisition onJanuary 1.
3. Prepare the journal entry to record the interest payment onDecember 31, 2016, assuming the effective interest method.

Answer & Explanation Solved by verified expert

3.7 Ratings (438 Votes)

Solution A Cash equivalent price of land Present value of note discounted at 6 market rate 50000 PV Factor at 6 for 10th period 50000 0558395 27920 Journal Entries Rubio Date See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member