need help with this problem.
On July 1, 2008, The Reno Rattlers Inc. bought a reconditioned D.C. 3 to cut travel costs for its players to go away to games. The Rattlers paid $1million in cash and signed a promissory note with no stated interest rate for 3.96 million due and payable after 12 months, but renegotiable on June 30, 2009. Under similar circumstances, a bank would charge a company with the same risk profile as the Reno Rattlers 10%p.a. on such a note.
A. Is there any deferred interest on this note? If so, how much on July 1, 2008?
B. What is the purchase value of the DC-3?
C. What entry or entries would you make on July 1, 2008 to record this transaction?
D. What entries, if any should be made on December 31, 2008 re accrued interest expense? Thanks
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