Problem 8-6 (with solution) Problem 8-6 (ACP)On January 1, 2021, North Company acquired a machinerwith cash price of P750,000 for P1,000,000.The entity paid P200,000 and signed a noninterest bearinepromissory note for the balance which is payable in 4 eaualinstallments every December 31 of each year.Required:Prepare journal entries for 2021.

Accounts Payable: Accounts payable is recognized in the accounting books of a company to indicate…

Problem 8-6 (ACP) machinery On January 1, 2021, North Company acquired a with cash price of P750,000 for P1,000,000. The entity paid P200,000 and signed a noninterest bearing promissory note for the balance which is payable in 4 egual installments every December 31 of each year. Required: Prepare journal entries for 2021.

Problem 8-6 (ACP) machinery On January 1, 2021, North Company acquired a with cash price of P750,000 for P1,000,000. The entity paid P200,000 and signed a noninterest bearing promissory note for the balance which is payable in 4 egual installments every December 31 of each year. Required: Prepare journal entries for 2021.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 23P: Notes Receivable On January 1, 2019, Lisa Company sold machinery with a book value of 118,000 to...

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Notes Receivable On January 1, 2019, Lisa Company sold machinery with a book value of 118,000 to Mark Company. Mark signed a 180,000 non-interest-bearing note, payable in three 60,000 annual installments on December 31, 2019, 2020, and 2021. The fair value of the machinery was 149,211.12 on the date of sale. The machinery had been purchased by Lisa at a cost of 160,000. Required: 1. Prepare all the journal entries on Lisas books for January 1, 2019, through December 31, 2021. 2. Prepare the notes receivable portion of Lisas balance sheet on December 31, 2019 and 2020.
On January 1, 2018, King Inc. borrowed $150,000 and signed a 5-year, note payable with a 10% interest rate. Each annual payment is in the amount of $39,569 and payment is due each Dec. 31. What is the journal entry on Jan. 1 to record the cash received and on Dec. 31 to record the annual payment? (You will need to prepare the first row in the amortization table to determine the amounts.)
Discounting of Notes Payable On October 30, 2019, Sanchez Company acquired a piece of machinery and signed a 12-month note for 24,000. The lace value of the note includes the price of the machinery and interest. The note is to be paid in four 6,000 quarterly installments. The value of the machinery is the present value of the four quarterly payments discounted at an annual interest rate of 16%. Required: 1. Prepare all the journal entries required to record the preceding information including the year-end adjusting entry and any payments. Present value techniques should be used. 2. Show how the preceding items would be reported on the December 31, 2019, balance sheet.
Comprehensive Notes Receivable On January 1, 2019, Seaver Company sold land with a book value of 23,000 to Bench Company. Bench paid 15,000 down and signed a 15,000 non-interest-bearing note, payable in two 7,500 annual installments on December 31, 2019, and 2020. Neither the fair value of the land nor of the note is determinable. Benchs incremental borrowing rate is 12%. Later in the year, on July 1, 2019, Seaver sold a building to Hane Company, accepting a 2-year, 100,000 non-interest-bearing note due July 1, 2021. The fair value of the building was 82,644.00 on the date of the sale. The building had been purchased at a cost of 90,000 on January 1, 2014, and had a book value of 67,500 on December 31, 2018. It was being depreciated on a straight-line basis (no residual value) over a 20-year life. Required: 1. Prepare all the journal entries on Seavers books for January 1, 2019, through December 31, 2020, in regard to the Bench note. 2. Prepare all the journal entries on Seavers books for July 1, 2019, through July 1, 2021, in regard to the Hane note. 3. Prepare the notes receivable portion of Seavers balance sheet on December 31, 2019 and 2020.
On January 1, 2019, Boater Company issues a 20,000 non-interest-bearing, 5-year note for equipment. Neither the fair value of the note nor the equipment is determinable. Boaters incremental borrowing rate is 9%. The asset has a useful life of 7 years. Prepare the journal entry for Boater to record the issuance of the note on January 1.
Spath Company borrows 75,000 by issuing a 4-year, noninterest-bearing note to a customer on January 1, 2019. In addition, Spath agrees to sell inventory to the customer at reduced prices over a 5-year period. Spaths incremental borrowing rate is 12%. The customer agrees to purchase an equal amount of inventory each year over the 5-year period so that a straight-line method of revenue recognition is appropriate. Required: Prepare the journal entries on Spaths books for 2019 and 2020. (Round answers to 2 decimal places.)
Hamlet Corporation purchases computer equipment at a price of 100,000 on January 1, 2019, paying 40,000 down and agreeing to pay the balance in three 20.000 annual instalments beginning December 31, 2019. It is not possible to value either the equipment or the 60,000 note directly; how-ever, Hamlet's incremental borrowing rate is 12%. Required: 1. Prepare a schedule to compute the interest expense and discount amortization on the note. 2. Prepare all the journal entries for Hamlet to record the issuance of the note, each annual interest expense, and the three annual installment payments.
Anderson Air is a customer of Handler Cleaning Operations. For Anderson Airs latest purchase on January 1, 2018, Handler Cleaning Operations issues a note with a principal amount of $1,255,000, 6% annual interest rate, and a 24-month maturity date on December 31, 2019. Record the journal entries for Handler Cleaning Operations for the following transactions. A. Entry for note issuance B. Subsequent interest entry on December 31, 2018 C. Honored note entry at maturity on December 31, 2019
On July 1, 2019, Aldrich Company purchased as an available-for-sale security 200,000 face value, 9% U.S. Treasury notes for 194,000. The notes mature July 1, 2020, and pay interest semiannually on January 1 and July 1. The notes were sold on December 1, 2019, for 199,000. Aldrich normally uses straight-line amortization on all of its notes. In its income statement for the year ended December 31, 2019, what amount should Aldrich report as a gain on the sale of the available-for-sale security? a. 2,500 b. 3,500 c. 5,000 d. 6,000
Credulous Company purchased equipment on January 1, 2020 under the following terms: The same equipment was available at a cash price of Problem 23-2 (ACP) uisitions P200,000 downpayment b. Five annual payments of P100,000, the first installment note to be paid on December 31, 2020. a. ordinary P120 per alue of P580,000. cement Required: Prepare journal entries for 2020 and 2021. 00 for alued On January 1, 2020, Enrich Company purchased a machine under the following terms: Problem 23-3 (ACP) e of ch it nal b. Four annual payments of P200,000, the first installment a. P100,000 downpayment ue note to be paid on December 31, 2020. The fair value of the machine is not clearly determinable on The prevailing rate of interest for this type of obligation is 10%. The present value factors at 10% for four periods are: is the date of acquisition. .683 3.170 Present value of 1 Present value of ordinary annuity of 1 Required: Prepare journal entries for 2020 and 2021.
Problem 6-6 (AICPA Adapted) On January 1, 2021, Remarkable Company had the following account balances: Note receivable from sale of an idle building Note receivable from an officer 7,500,000 2,000,000 The P7,500,000 note receivable is dated May 1, 2020, bears interest at 9% and represents the balance of the consideration received from the sale of an idle building to Solid Company. Principal payments of P2,500,000 plus interest are due annually beginning May 1, 2021. Solid Company made the first principal and interest payment on May 1, 2021. The P2,000,000 note receivable is dated December 31, 2018, bears interest at 8% and is due on December 31, 2023. The note is due from the president of Remarkable Company. Interest is payable annually on December 31 and all interest payments were made through December 31, 2021. On July 1, 2021, Remarkable Company sold a parcel of land to Boom Company for P4,000,000 under an installment sale contract. Boom Company made a P1,200,000 cash down payment…
ok The following transactions took place for Smart Solutions Incorporated. ces 2020 a. July 1 Loaned $70,000 to employees of the company and received back one-year, 10 percent notes. b. December 31 Accrued interest on the notes. 2021 c. July 1 d. July 1 Required: Prepare the journal entries that Smart Solutions Incorporated would record for the above transactions. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Received interest on the notes. (No interest has been recorded since December 31.) Received principal on the notes. Journal entry worksheet 1 Loaned $70,000 to employees of the company and received back one-year, 10 percent notes. Record the transaction. 2 Note: Enter debits before credits. < Date July 01, 2020 < Journal entry worksheet 1 Date Note: Enter debits before credits. December 31, 2020 Record entry 1 Accrued interest on the notes. Record the transaction. 2 Journal entry worksheet 2…