2.)Anxious Company acquired two items of machinery as follows:On December 31, 2019, Anxious company purchased a machine in exchange for a noninterest bearing noterequiring 10 payments of P500,000. The first payment was made on December 31, 2020, and the others aredue annually on December 31.The prevailing rate of interest for this type of note at date of issuance was 12%. The present value ofordinary annuity of I at 12% is 5.33 for the nine periods and 5.65 for ten periods.• On December 31, 2020, Anxious Company acquired use of machinery by issuing the seller a two yearnoninterest bearing note for P3,000,000. In recent borrowing, Anxious Company has paid a 12% interestfor this type of note.The present value of 1 at 12% for two years is .80 and the present value of an ordinary annuity of 1 at 12%for two years is 1.69.Required: Prepare all journal entries for 2019, 2020, and 2021.

Answered: Anxious Company acquired two items of…

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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On 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. Roberts’s journal entry to record the collection of the note and interest on November 1, 2023, should include a: (round all calculations to the nearest whole dollar) Credit to “Interest Revenue” for $2,500. Credit to “Interest Revenue” for $3,000. Credit to “Interest Receivable” for $2,500. Credit to “Interest Receivable” for $3,000.
On October 1, 2023, Marigold Corp. sold a harvesting machine to Bonita Industries. Instead of a cash payment, Bonita Industries gave Marigold a $170,000, two-year, 10% note; 10% is a realistic rate for a note of this type. The note required interest to be paid annually on October 1, beginning October 1, 2024. Marigold's financial statements are prepared on a calendar-year basis. (a) Your answer has been saved. See score details after the due date. Assuming that no reversing entries are used and that Bonita Industries fulfills all the terms of the note, prepare the necessary journal entries for Marigold for the entire term of the note. (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. List all debit entries before credit entries.) Date Account Titles and Explanation Debit Cr
Cheyenne Corp. borrowed $1080000 from National Bank on May 31, 2019. The 3-year, 7% note required annual payments of $411536 beginning May 31, 2020. The total amount of interest to be paid over the life of the loan is O $75600. O $154608. O $301688. O $226800.
XYZ Company is a dealer of equipment. On January 1 2020, the entity sold an equipment in exchange for non-interest bearing note requiring three annual payments of P500,000. The first payment was made on December 31, 2020. The market interest rate for similar notes was 9% PV of 1 at 9% for 3 periods 0.772183 PV of an ordinary annuity of 1 at 9% for 3 periods 2.531295 Required: a. Complete the amortization table Date Annual Collection Interest Income Principal Present Value Jan 1, 2020 1,265,647.33 Dec. 31 2020 _____________ _____________ _________ ___________ Dec. 31 2021 _____________ _____________ __________ ___________ Dec. 31 2022 ______________ _____________ __________ 0.00 b. Provide the journal entries to record the sale of equipment on January 1,…
On April 1, 2021, ABC CO. issued a 9% interest bearing note with a face amount of P 30,000,000 for the purchase of a machine. The note is payable in five equal annual installments starting on March 31,2022. Interest is payable annually base on the remaining balance. There is no established cash price for the equipment. The prevailing market rate of interest for a note of this type is 12%.How much is the interest expense for the year 2023?
On January 1, 2021, The Corporation sold goods to Adobo Company. Adobo signed a noninterest-bearing note requiring payment of P600,000 annually for seven years. The first payment was made on January 1, 2021.The prevailing rate of interest for this type of note at date of issuance was 10%.· PV of an ordinary annuity of 1 at 10% for 6 period- 4.36· PV of an ordinary annuity of 1 at 10% for 7 period- 4.87What is the carrying amount of the note receivable on January 1, 2021?
On January 1, 2021, Jin Company sold equipment at a cost of P400,000. The consideration is a noninterest-bearing note. Related data of the note: The annual collection for three periods is P200,000 every end of the year. The effective rate is 12% What is the present value of the note on January 1, 2021?
On January 1, 2021, Cee Company sold a machine with a cost of P500,000 and carrying value of P150,000 to Tee Company. In lieu of cash payment, Tee Company gave Cee a 4-year, P100,000, 10% note. The note requires interest to be paid annually on December 31. The prevailing rate of interest for a note of this type is 16% and the principal amount of the note is to be paid in four equal annual instalments of P25,000 every December 31. Required: Compute the following: (Round off PV factors to 4 decimal places before multiplying.) 1. Gain or loss on sale of machinery (place parenthesis if loss) 2. Interest income
On January 1, 2020, the Dolce Corporation issued a three-year, non-interest bearing note with face value of P3,000,000 for a piece of land purchased from Jardine Corporation. The note is payable in annual installments of P1,000,000 every December 31, starting on December 31, 2020. The land has an equivalent cash price of P2,400,000, a price that provides the note an effective interest rate of 12%. Question: Using the infro above, what is tha balance of Discount on Notes Payable at December 31, 2020? ANSWER: P312,000 Explain why 132,000 is the answer. Provide a detailed solution.
On January 1, 2021, VKS Corporation sold goods to IntAcc2 Company. IntAcc2 signed a noninterest-bearing note requiring payment of P600,000 annually for seven years. The first payment was made on January 1, 2021.The prevailing rate of interest for this type of note at date of issuance was 10%.· PV of an ordinary annuity of 1 at 10% for 6 period- 4.36· PV of an ordinary annuity of 1 at 10% for 7 period- 4.87What is the carrying amount of the note receivable on January 1, 2021?
LINDT Corporation manufactures and sells electrical generators. On May 31, 2020, it sold an electrical generator costing ₱ 700,000 for ₱ 1,000,000. The buyer paid ₱100,000 down and signed a ₱ 900,000 non-interest bearing note payable in three equal installments starting May 31, 2021. Assume the prevailing interest rate for a note of this type is 12%. The present value of an ordinary annuity of 1 for three periods is 2.4018. How much is the Interest income for the year ending December 31, 2021?
At the beginning of 2021, VHF Industries acquired a machine with a fair value of $6,774,420 by issuing a four-year, noninterest-bearing note in the face amount of $8 million. The note is payable four annual installments of $2 million at the end of each year. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. What is the effective rate of interest implicit in the agreement? 2. to 4. Prepare the necessary journal entries. When recording the issuance of the installment note record it at its net book value in a single note payable (or receivable) account (no Discount). 5. Suppose the market value of the machine was unknown at the time of purchase, but the market rate of interest for notes of similar risk was 12%. Prepare the journal entry to record the purchase of the machine. Complete this question by entering your answers in the tabs below. Required 1 Required 2 to 4 Interest rate What is the effective…

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