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

Date

Account Titles and Explanation

Debit

Credit

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

31/12/2016 Computer A/c Dr 136500 To Vendor/Supplier Cr 97500 To Bank Cr 39000 31/12/2017 Vendor/Supplier A/c Dr 19500 Interest A/c(97500*9%) Dr 8775 To Bank 28275 31/12/2018 Vendor/Supplier A/c Dr 19500 Interest A/c((97500-19500)*9%) Dr 7020 To Bank 26520

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