Essay
On January 1,2017 BCL Transmission Services Co.issued a $40,000,non-interest bearing note,due on January 1,2018,in exchange for a custom-built computer system.The fair value of the computer system is not easily determinable.The market rate of interest for similar transactions is 4%.BCL's year-end is December 31.
Required:
a.Prepare the journal entry to record the issuance of the note payable.
b.Prepare the journal entry to record the accrual of interest at December 31,2017,assuming that BCL prepares adjusting entries only at year-end.
c.Prepare the journal entry to record the retirement of the note payable on January 1,2018.
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