FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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On April 19, 2018, Millipede Machinery sold a tractor to Thomas Hartwood, accepting a note promising payment of $120,000 in five years. The applicable effective interest rate is 7%. What amount of sales revenue would
Millipede recognize on April 19, 2018, for the Hartwood transaction?
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- jaydiparrow_forwardOn January 1, 2023, Pubnico Marine Ltd. sold a lobster boat to a in exchange for a five-year $1,250,000 promissory note with an annual interest rate of 8%. Interest only payments are due SEMI-ANNUALLY, on June 30 and December 31. The market rate for an equivalent loan to this customer would have been 12%*. Pubnico Marine Ltd uses IFRS, has a Dec 31 year end, and prepares adjusting entries annually. Required: a) Calculate the amount of revenue to be recorded on January 1st 2023 by Pubnico Marine Ltd. for the sale of the product. i. Calculate using the present value tables in the textbook. ii. Calculate using EXCEL “PV” formula. Copy your Excel formula to another cell as text so it can be viewed (put ‘ in front of it for text.) (Remember that the payment and the future value must be negative.) b) Prepare the journal entries for Pubnico Marine Ltd at Jan 1, 2023, June 30, 2023, and Dec 31, 2023. (Show all calculations.) c) Prepare the note amortization schedule. Be sure to show the all…arrow_forwardPresident Company purchased merchandise from Captain Corporation on September 30, 2024. Payment was made in the form of a noninterest-bearing note requiring President to make six annual payments of $4,600 on each September 30, beginning on September 30, 2027. Calculate the amount at which President should record the note payable and corresponding purchase on September 30, 2024, assuming that an interest rate of 10% properly reflects the time value of money in this situation. Note: Use tables, Excel, or a financial calculator. Round your final answers to nearest whole dollar amount. Round your intermediate calculations to the nearest whole dollar. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)arrow_forward
- On 1 July 2019, Sitara Ltd sells a computer to Kitara Ltd. The computer cost Sitara Ltd $9000. Rather than selling the item for a cash price or a short-term claim for cash of $12 009, Sitara Ltd accepts a promissory note that requires Kitara Ltd to make four annual payments of $4000 each, the first one to be made on 30 June 2020. The difference between the gross receipts and the current sales price represents interest revenue earned by Sitara Ltd over the note period. The rate implicit in the arrangement is 12 per cent. Provide a journal entry with a clear distribution of instalment payment into interest and principal amount as of 30/6/2021.arrow_forwardLathrop has a 5%, $40,000 note receivable from the sale of merchandise on January 1, 2020. The note was issued when the market rate was 5%. The note is due December 31, 2024. Annual interest is due each December 31. On December 31, 2020, Lathrop reviews the collectibility of its note and determines that only $15,000 is likely to be received on the due date from this note. Although Lathrop received the 2020 interest payment, the company does not expect to receive further interest payments. What is included as part of the adjusting entry that Lathrop records on December 31, 2020? Select one: a. Credit to Accounts Receivable for $12,341. b. Debit to Bad Debt Expense of $27,659. c. Debit to Bad Debt Expense of $19,432 d. Credit to the Allowance for Doubtful Accounts for $25,000.arrow_forwardOn November 1, 2022, Roberts Inc. provided consulting services in exchange for a one-year, 10% promissory note with a face value of $30,000. The note is interest-bearing. The note’s face value plus accrued interest compounded annually is due to be paid back when the nature matures on November 1, 2023. What should be the amount of “Service Revenue” Roberts recognizes in 2022? $33,000 $30,000 $27,273 $27,000arrow_forward
- Mystic Magic issued a $140,000 note on January 1, 2018 to a customer, Amy Arnold, in exchange for merchandise. Terms of the note are 9-month maturity date on October 1, 2018 at a 10.4% annual interest rate. Amy Arnold does not pay on her account and dishonors the note. On November 10, 2018, Mystic Magic decides to sell the dishonored note to a collection agency for 35% of its value. Record the journal entries for Mystic Magic for the following transactions. If an amount box does not require an entry, leave it blank. Round your answers to two decimal places. A. Initial sale on January 1, 2018 B. Dishonored note entry on Oct 1, 2018 C. Receivable sale on November 10, 2018 A. Jan. 1, 2018arrow_forwardOn December 31, 2020, Stellar Company signed a $ 1,022,000 note to Pearl Bank. The market interest rate at that time was 11%. The stated interest rate on the note was 9%, payable annually. The note matures in 5 years. Unfortunately, because of lower sales, Stellar’s financial situation worsened. On December 31, 2022, Pearl Bank determined that it was probable that the company would pay back only $ 613,200 of the principal at maturity. However, it was considered likely that interest would continue to be paid, based on the $ 1,022,000 loan.arrow_forwardOn Dec 30, 2020 Fox purchased a machine from Grisley Corp in exchange for a zero-interest bearing note requiring eight payments. A down payment was made on Dec 30, 2020 and the note's rents are due annually beg 12/30/2021 Note: the down payment IS the first payment of the notes rents At date of issuance the prevailing rate of interest for this type of note was 11% Present value factor are as follows: If the note balance to Grisley Corp net of the down payment is $376,960 on 12/30/2020 then what is the value of each payment? My answer is $47,120 is that correct thank you Brendaarrow_forward
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