On 1 July, 2003 Bryson Ltd Sells a Machine to Adams

question 8

Multiple Choice

On 1 July, 2003 Bryson Ltd sells a machine to Adams Ltd in exchange for a promissory note which requires Adams Ltd to make five payments of $8,000, the first to be made on 30 June, 2004. The machine cost Bryson Ltd $20,000 to manufacture. Bryson Ltd would normally sell this type of machine for $30,326 for cash or short-term credit. The implicit interest rate in the agreement is 10 per cent. What are the appropriate journal entries to record the sale agreement and the first two instalments using the net-interest method?

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Definitions:

Burden Of Proof

The obligation to present evidence to support one's claim or defense in a legal proceeding.

Embezzlement

The act of withholding assets for the purpose of conversion of such assets, by one or more individuals to whom the assets were entrusted.

Income Tax Deductions

Expenses that can be subtracted from gross income to determine taxable income, thereby reducing the overall tax liability.

Forgery

The illegal act of creating, altering, or imitating objects, documents, or signatures with the intention to deceive.