Cool Globe Inc

question 79

Essay

Cool Globe Inc. entered into two transactions, as follows:
1. Purchased equipment paying $20,000 at the date of purchase and signing a noninterest-bearing note requiring the balance to be paid in four annual installments of $20,000 on the anniversary date of the contract. Based on Cool Globe's 12% borrowing rate for such transactions, the implicit interest cost is $19,253.
2. Purchased a tract of land in exchange for $10,000 cash that was paid immediately and signed a noninterest-bearing note requiring five $10,000 annual payments. The first annual payment of the note is due in one year. The fair value of the land is $46,000.
Required:
Prepare the journal entries for these transactions.

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Definitions:

External Adaptation

A pattern of basic assumptions shared between employees of the goals, tasks, and methods that need to be achieved, together with ways of managing success and failure.

Outside Influences

External factors or forces that can affect a person's decisions, behaviors, or outcomes, often beyond their immediate control.

External Adaptation

The process through which an organization or individual adjusts to changes in the external environment to survive and thrive.

Internal Integration

A shared identity with agreed-upon methods of working together.