problem b 5 420546

On December 1, Showcase Interiors purchased a shipment of furniture from Colonial House by paying $10,500 cash and issuing an installment note payable in the face amount of $28,800. The note is to be paid in 24 monthly installments of $1,200 each. Although the note makes no mention of an interest charge, the rate of interest usually charged to Showcase Interiors in such transactions is 1A??1 percent per month. Use Table PV’2 (in Exhibit B 9) a. Compute the present value of the note payable, using a discount rate of 1A??1 percent per month. (Round your PV factor to 3 decimal places and final answer to the nearest dollar amount. Omit the “$” sign in your response.) Present value $ b. Prepare the journal entries in the accounts of Showcase Interiors on (Round your PV factor to 3 decimal places and final answers to the nearest dollar amount. Omit the “$” sign in your response): 1. December 1, to record the purchase of the furniture (debit Inventory). 2. December 31, to record the first $1,200 monthly payment on the note and to recognize interest expense for one month by the effective interest method. Date General Journal Debit Credit Dec. 1 Dec. 31 c. Show how the liability for this note would appear in the balance sheet at December 31. (Assume that the note is classified as a current liability.) (Round your PV factor to 3 decimal places and final answer to the nearest dollar amount. Omit the “$” sign in your response.) Notes payable $