1. Why is the par value rather than the market value recorded in a stock account?
2. How do journal entries reflect the market value of par value stock when the stock is first issued?
3. What distinguishes par value from no-par stock in the shareholders’ equity section of the balance sheet?
Ransopher Corporation needs to buy a new computer system. Dwell Computers has agreed to sell Ransopher a computer system and accept a 10-year, noninterest-bearing note payable. The market rate of interest is currently 7 percent compounded annually and the value of the computer system is $53,000.
A. What is the face value of the noninterest-bearing note?
B. Prepare a spreadsheet that indicates the interest cost associated with the loan each year and the carrying value of the loan at the end of each year.
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