Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. on january 1,2021, crown company sold property to

On January 1,2021, Crown Company sold property to Leary Company. There was no established exchange...

50.1K

Verified Solution

Question

Accounting

On January 1,2021, Crown Company sold property to Leary Company. There was no established exchange price for the property, and Leary gave Crown a $5,000,000 zero-interest-bearing note payable in 5 equal annual installments of $800,000, with the first payment due December 31,2021. The prevailing rate of interest for a note of this type is 9%. The present value of the note at 9% was $3,605,000 at January 1,2021. What should be the balance of the Discount on Notes Payable account on the books of Leary at December 31,2021 after adjusting entries are made, assuming that the effective-interest method is used?

Answer & Explanation Solved by verified expert
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

Other questions asked by students