Answered: 00 cash plus accrued interest. Gi burse…

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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Transcribed Image Text:Part 2 Now assume that at year end 2020, Pharoah enters into the following transactions related to the company's receivables: Pharoah sells the note receivable to Prairie Bank for $48,000 cash plus accrued interest. Given the creditworthiness of Pharoah's customer, the bank accepts the note without recourse and assesses a finance charge of 3.30%. Prairie Bank will collect the note directly from the customer. 1. Pharoah factors some accounts receivable at the end of the year. Accounts totalling $42,000 are transferred to Shamrock, Inc., with recourse. Shamrock retains 6% of the balances and assesses a finance charge of 4% on the transfer. Shamrock will collect the receivables from Logo's customers. The fair value of the recourse obligation is $3,600. 2. Prepare the journal entry to record the transfer of the note receivable to Prairie Bank. (Round answers to O decimal places, e.g. 8,971. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.)

Jacob has a parcel of vacant land that he had purchased as an investment. The land has an adjusted cost
base of $156,000 to Jacob. The fair market value of the land on January 1 of the current taxation year is
$167,500. On this date, Jacob gifts the property to his 14-year-old daughter, Tabitha. Tabitha subsequently
sells the land on December 1 of the current year for its fair market value of $200,000. How much gain will
each recognize on this series of transactions?
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