On December 31, 2014, Oakbrook Inc. rendered services to Beghun
Corporation at an agreed price of $102,049, accepting $40,000 down and agreeing to accept the balance in four
equal installments of $20,000 receivable each December 31. An assumed interest rate of 11% is imputed.
Prepare the entries that would be recorded by Oakbrook Inc. for the sale and for the receipts and interest
on the following dates. (Assume that the effective-interest method is used for amortization purposes.)
(a) December 31, 2014. (c) December 31, 2016. (e) December 31, 2018.
(b) December 31, 2015. (d) December 31, 2017.
Calculation and enries recorded by Oakbrook Inc. for the sale and for the receipts and interest are as follow
we have been provided with the following information
agreed price of $102,049
$40,000 down payment and agreeing to accept the balance in four equal installments of $20,000 receivable each December 31.
agreed price $102,049
Less : Down Pymt $ (40,000)
Balace paid $ 62049
interest rate of 11% . So we will calculate prasent value factor at the 11 % rate. and the time period for the calculation is 4 year we will calcuate as follow
| date | intstaalment | Interest Exp | Balance Amt | Note Carryng Am |
| December 31, 10 | 62049 | |||
| December 31, 11 | 20000 | 6825 | 13175 | 48874 |
| December 31, 12 | 20000 | 5376 | 14624 | 34251 |
| December 31, 13 | 20000 | 3768 | 16232 | 18018 |
| December 31, 14 | 20000 | 1982 | 18018 | 0 |
Interest expnses is as follow
| Year | Carrying amt | Rate | Int exp |
| 1 | 62049 | 11% | 6825 |
| 1 | 48874 | 11% | 5376 |
| 3 | 34251 | 11% | 3768 |
| 4 | 18018 | 11% | 1982 |
Following are the general entries
| Date | Paricular | Dr | Cr |
| December 31, 10 | Cash
Note recivable Discount on N/R Sales |
40,000
80,000
|
17,951
102,049 |
| December 31, 11 | Cash
Note recivable Discount on N/R Interest Revenue |
20000
6825 |
20000
6825 |
| December 31, 12 | Cash
Note recivable Discount on N/R Interest Revenue |
20000
5376 |
20000
5376 |
| December 31, 13 | Cash
Note recivable Discount on N/R Interest Revenue |
20000
3768 |
20,000
3768 |
| December 31, 14 | Cash
Note recivable Discount on N/R Interest Revenue |
20000
1982 |
20000
1982 |
Ledger Accounts
Notes Revable
| intstaalment | Debit | Credit | Balance | |
| December 31, 10 | 80000 | 80000 | ||
| December 31, 11 | 20000 | 60000 | ||
| December 31, 12 | 20000 | 40000 | ||
| December 31, 13 | 20000 | 20000 | ||
| December 31, 14 | 20000 | 0 | 0 |
