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?

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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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