Cool Globe Inc

question 36

Essay

Cool Globe Inc. entered into two transactions, as follows:
1. Purchased equipment paying $20,000 down and signed 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 down payment and a noninterest-bearing note requiring five $10,000 annual payments, with the first annual payment 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:

Past Performance

Previous accomplishments or performance levels, often evaluated in various contexts like job applications or investment strategies.

Control

In scientific experiments, the standard conditions that the experimental groups are compared against.

Behavior Change

A process of altering habits, actions, or attitudes to improve health, meet personal goals, or adapt to new situations.

Rewards

Benefits or compensations provided in response to someone's action, effort, or behavior, often used as a motivational tool.