Hanna Manufacturing Limited Receives $240,000 on January 1, 2013 When

question 88

Essay

Hanna Manufacturing Limited receives $240,000 on January 1, 2013 when it issues a 6%, 3-year note payable to finance the purchase of equipment. The terms provide for annual payments each December 31. The first payment is due December 31, 2013.
Instructions
Prepare the journal entries to record the note and the first two instalment payments assuming:
a. the payment is a fixed principal payment of $80,000.
b. the payment is a blended payment of $89,786.76.

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Definitions:

10% More

Indicates an increase or addition of ten percent to a given number or value.

7% Less

A reduction by seven percent from a previous amount or value.

Standard & Poor's 500

An American stock market index based on the market capitalizations of 500 large companies having common stock listed on the NYSE or NASDAQ.

Stock Index

A statistical measure that shows changes in the stock market by tracking selected stocks' prices.