Hh1. Presented below are two independent situations:Click here to view factor tables.(a) On January 1, 2025, Pharoah Inc. purchased land that had an assessed value of $322,000 at the time of purchase. A $558,000,zero-interest-bearing note due January 1, 2028, was given in exchange. There was no established exchange price for the land, nor aready fair value for the note. The interest rate charged on a note of this type is 12%.Determine at what amount the land should be recorded at January 1, 2025, and the interest expense to be reported in 2025 related tothis transaction. (Round intermediate calculation to 5 decimal places, e.g. 0.23451 and final answers to O decimal places, e.g. 38,548)Land to be recorded at January 1, 2025 $Interest expense to be reported(b) On January 1, 2025, Novak Furniture borrowed $3,900.000 (face value) from Sinise Co., a major customer, through a zero-interest-bearing note due in 4 years. Because the note was zero-interest-bearing, Novak Furniture agreed to sell furniture to this customer atlower than market price. A 10% rate of interest is normally charged on this type of loan.Prepare the journal entry to record this transaction. (Round intermediate calculation to 5 decimal places, e.g. 0.23451 answers to 0 decimalplaces, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles areautomatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries.) Prepare the journal entry to record this transaction. (Round intermediate calculation to 5 decimal places, e.g. 0.23451 answers to O decimalplaces, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles areautomatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries.)Account Titles and ExplanationInterest expense to be reported for 2025DebitDetermine the amount of interest expense to report for 2025. (Round answer to O decimal places, e.g. 38,548)$Credit

Land to be recorded at January 1, 2025 = Present value of Zero-interest-bearing note. Present value…

(a) On January 1, 2025, Pharoah Inc. purchased land that had an assessed value of $322.000 at the time of purchase. A $558,000, zero-interest-bearing note due January 1, 2028, was given in exchange. There was no established exchange price for the land, nor a ready fair value for the note. The interest rate charged on a note of this type is 12%. Determine at what amount the land should be recorded at January 1, 2025, and the interest expense to be reported in 2025 related to this transaction. (Round intermediate calculation to 5 decimal places, e.g. 0.23451 and final answers to O decimal places, e.g. 38,548.) Land to be recorded at January 1, 2025 $ Interest expense to be reported

(a) On January 1, 2025, Pharoah Inc. purchased land that had an assessed value of $322.000 at the time of purchase. A $558,000, zero-interest-bearing note due January 1, 2028, was given in exchange. There was no established exchange price for the land, nor a ready fair value for the note. The interest rate charged on a note of this type is 12%. Determine at what amount the land should be recorded at January 1, 2025, and the interest expense to be reported in 2025 related to this transaction. (Round intermediate calculation to 5 decimal places, e.g. 0.23451 and final answers to O decimal places, e.g. 38,548.) Land to be recorded at January 1, 2025 $ Interest expense to be reported

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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