PROBLEM 16 GAMAY Corporation sold a machine on July 1, 2021. The cash price of the machine is P79,000. The buyer signed a deferred payment contract that provides for a down payment of P10,000 and an 8 year note bearing interest at 10%. The note is to be paid in 8 equal annual payments. The payments are made on June 30 of each year, beginning June 30, 2022. 39. The accrued interest receivable as of December 31, 2021 in this note is: 40. The total interest to be earned over the life of the note is:

PROBLEM 16 GAMAY Corporation sold a machine on July 1, 2021. The cash price of the machine is P79,000. The buyer signed a deferred payment contract that provides for a down payment of P10,000 and an 8 year note bearing interest at 10%. The note is to be paid in 8 equal annual payments. The payments are made on June 30 of each year, beginning June 30, 2022. 39. The accrued interest receivable as of December 31, 2021 in this note is: 40. The total interest to be earned over the life of the note is:

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

Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable

Section: Chapter Questions

Problem 12P: Hamlet Corporation purchases computer equipment at a price of 100,000 on January 1, 2019, paying...

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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.
On August 1, 2019, Kern Company leased a machine to Day Company for a 6-year period requiring payments of 10,000 at the beginning of each year. The machine cost 40,000 and has a useful life of 8 years with no residual value. Kerns implicit interest rate is 10%, and present value factors are as follows: Present value for an annuity due of 1 at 10% for 6 periods4.791 Present value for an annuity due of 1 at 10% for 8 periods5.868 Kern appropriately recorded the lease as a sales-type lease. At the inception of the lease, the Lease Receivable account balance should be: a. 60,000 b. 58,680 c. 48,000 d. 47,910
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.
Compound Interest Issues You are given the following situations: 1. Thomas Petty owes a debt of 7,000 from the purchase of a boat. The debt bears 12% interest payable annually. Thomas will pay the debt and interest in 5 annual installments beginning in 1 year. Calculate the equal annual installments that will pay off the debt and interest at 12% on the unpaid balance. 2. On January 1, 2019, John Cothran offers to buy Ruth Houses used tractor and equipment for 4,000 payable in 12 equal semiannual installments which are to include payment of 10% interest on the unpaid balance and payment of a portion of the principal with the first installment to be made on January 1, 2019. Calculate the amount of each of these installments. 3. Nadine Love invests in a 60,000 annuity at 12% compounded annually on March 1, 2019. The first of 15 receipts from the annuity is payable to Love on March 1, 2029, 10 years after the annuity is purchased and on the date Love expects to retire. Calculate the amount of each of the 15 equal annual receipts. Required: Using the appropriate tables, solve each of the preceding situations.
Non-Interest-Bearing Note Payable: Present Value On January 1, 2019, Northern Manufacturing Company bought a piece of equipment by signing a non-interest-bearing 80,000, 1-year note. The face value of the note includes the price of the equipment and the interest. The effective interest rate is an annual rate of 16%, and the note is to be paid in four 20,000 quarterly installments on March 31, June 30, September 30, and December 31. The price of the equipment is the present value of the four payments discounted at the effective interest rate. Required: Prepare all journal entries to record the preceding information. Present value techniques should be used. If Northerns financial statements were issued on June 30, 2019, what amount would the company report as notes payable?
Marathon Peanuts converts a $130,000 account payable into a short-term note payable, with an annual interest rate of 6%, and payable in four months. How much interest will Marathon Peanuts owe at the end of four months? A. $2,600 B. $7,800 C. $137,800 D. $132,600
Problem 11 On January 1, 2020, Molina Company sold a special machine that had a cash price of P900,000. The buyer paid P100,000 cash and signed a 4-year note. The note specified that it would be paid off in four equal annual payments of P274,565 each starting on December 31, 2020. The payments include 14% interest. 12. The carrying amount of the receivable on December 31, 2020 is
Problem 13 On January 1, 2020, Magbaril Company sold equipment with a carrying amount of P800,000 to Macud Company. As payment, Macud gave Magbaril Company a P1,200,000 note. The note bears an interest rate of 5% and is to be repaid in three annual installments of P400,000 (plus interest on the outstanding balance). The first payment was received on December 31, 2020. The prevailing rate of interest for a note of this type at January 1 was 10% and 9% on December 31. 15. The gain on sale of equipment is 16. The interest income to be recognized in 2021 is
PROBLEM 8 On January 1, 2022, Clark Co. received a P3,000,000, 10% note from a customer upon the sale of its goods. The note is to be paid in six equal semi-annual installments, plus interest on the outstanding balance every June 30 and December 31, starting June 30, 2021. The effective rate on the note is 9%. 1. How much is the note upon initial recognition? 2. How much is the interest income recognized by Clark in 2022? 3. How much is the carrying amount of the note on December 31, 2023?
PROBLEM:On October 1, 2021, Chrysanthemum Co. purchased equipment by issuing a four-year, 9% promissory note with face value of P1,500,000. The note is payable in four equal annual installments of P375,000 plus accrued interest on the unpaid balance every September 30 starting September 30, 2022. What is the carrying value of the note on December 31, 2023?* 750,000 1,500,000 766,875 842,812.50 What amount shall be reported as interest payable on December 31, 2022?* 101,250 25,312.50 126,562.50 Zero How much is the interest expense for the year 2023?* 92,812.50 16,875 101,250 67,500 How much is the interest expense for the year 2022?* 25,312.50 126,562.50 101,250 135,000
PROBLEM 5 On January 1, 2021, Son Co. Company purchased a machine for 300,000 in exchange for a 4-year note. The prevailing note of interest of type is 10%. The new machine was damaged during installation and the repair cost amounted to 30,000. Assuming that the machine has an available cash price that equals to the present value of the note if the note is bears interest at 12% rate. Required: 1.) How much is the cost of the machine? 2.) How much is the interest expense for the year 2022? 3.) How much is the carrying value of the notes as of December 31, 2024?
Problem 19 Marianne Company is a dealer in equipment. On December 31, 2019, Marianne Company sold equipment in exchange for a noninterest bearing note requiring five annual payments of P1, 000,000. The first payment was made on December 31, 2020. The market interest for similar notes was 8%. The relevant present value factors are: PV of lat 8% for 5 periods PV of an ordinary annuity of 1 at 8% for 5 periods 0.68 3.99 In its December 31, 2020statement of financial position, what should Marianne report as note receivable? а. 4, 000,000 b. 3,990,000 с. 3,309,200 d. 4,309,200