Splish Corporation purchased a computer on December 31, 2016, for $136,500, payi

Question

Splish Corporation purchased a computer on December 31, 2016, for $136,500, paying $39,000 down and agreeing to pay the balance in five equal installments of $19,500 payable each December 31 beginning in 2017. An assumed interest rate of 9% is implicit in the purchase price.

Date

Account Titles and Explanation

Debit

Credit

Splish Corporation purchased a computer on December 31, 2016, for $136,500, paying $39,000 down and agreeing to pay the balance in five equal installments of $19,500 payable each December 31 beginning in 2017. An assumed interest rate of 9% is implicit in the purchase price.

Explanation / Answer

Dec-31-16 Equipment 114848 =39000+(19500*3.88965) Discount on Notes Payable 21652           Notes Payable 97500           Cash 39000

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