Purchase Solution

Acme Company

Not what you're looking for?

Ask Custom Question

On January 1, 2013, Acme Company makes the two following acquisitions.

Purchases land having a fair market value of $329,000.00 by issuing a 5-year, zero-interest-bearing promissory note in the face amount of $554,384.74.
Purchases equipment by issuing a 6%, 8-year promissory note having a maturity value of $469,000.00 (interest payable annually).
The company has to pay 11% interest for funds from its bank.

(a) Record the two journal entries that should be recorded by Acme Company for the two purchases on January 1, 2013.

(b) Record the interest at the end of the first year on both notes using the effective-interest method.

Purchase this Solution

Solution Summary

Your tutorial, attached in excel, has a full amortization schedule for both notes, one at the imputed rate and the other using the note's actual rate. Entries are shown for purchase and year end interest accrual.

Solution provided by:
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
Recent Feedback
  • "hey just wanted to know if you used 0% for the risk free rate and if you didn't if you could adjust it please and thank you "
  • "Thank, this is more clear to me now."
  • "Awesome job! "
  • "ty"
  • "Great Analysis, thank you so much"
Purchase this Solution

Free BrainMass Quizzes
Organizational Leadership Quiz

This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.

Transformational Leadership

This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.

Understanding Management

This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.


This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.

Basic Social Media Concepts

The quiz will test your knowledge on basic social media concepts.