On January 1, 2015, Anderson Company Purchases Property of $300,000

question 100

Essay

On January 1, 2015, Anderson Company purchases property of $300,000 by paying $50,000 in cash and signing a 10-year mortgage note at 13% for the balance. The amortization schedule shows that Anderson Company will pay $46,072 per year. Journalize the first yearly payment on January 1, 2016.

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Definitions:

Accumulated Depreciation

The total depreciation that has been recorded for an asset over its useful life.

Gain On Sale

The profit earned from the sale of an asset above its book value.

GAAP

A set of widespread accounting rules and standards, referred to as Generally Accepted Accounting Principles, used for financial reporting.

Fair Value

The estimated market value of an asset or liability, reflecting the amount at which it could be bought or sold in a current transaction between willing parties.