ANSWER KEY E 6-12 Deferred annuities
E 6-12 Lincoln Company purchased merchandise from Grandville Corp. on September 30, 2011. Payment was made in the form of a noninterest-bearing note requiring Lincoln to make six annual payments of $5,000 on each September 30, beginning on September 30, 2014.
Required:
Calculate the amount at which Lincoln should record the note payable and corresponding purchases on September 30, 2011, assuming that an interest rate of 10% properly reflects the time value of money in this situation.
