Assuming Valco Brothers Farm fulfills all the terms of the note, prepare the necessary journal entries for Shamrock Equipment Company for the entire term of the note.
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On October 1, 2020, Shamrock Equipment Company sold a pecan-harvesting machine to Valco Brothers Farm, Inc. In lieu of a cash payment Valco Brothers Farm gave Arden a 2-year, $184,000, 8% note (a realistic rate of interest for a note of this type). The note required interest to be paid annually on October 1. Shamrock’s financial statements are prepared on a calendar-year basis.
Assuming Valco Brothers Farm fulfills all the terms of the note, prepare the necessary
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- Early in 2020, Oriole Equipment Company sold 400 Rollomatics at $6,600 each. During 2020, Oriole spent $20,000 servicing the 2-year assurance warranties that accompany the Rollomatic. All applicable transactions are on a cash basis. (a) Prepare 2020 entries for Oriole. Assume that Oriole estimates the total cost of servicing the warranties in the second year will be $40,000. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit At SaleDuring 2020Dec. 31, 2020 At SaleDuring 2020Dec. 31, 2020 At SaleDuring 2020Dec. 31, 2020Excel Corporation is experiencing financial difficulty and has met with their creditor (BMO) to explore their options related to a $1.5 million, 6% note payable that is outstanding. The note was issued on September 1, 2020 when the market rate of interest was 6%. There are two years remaining on the note and the current market rate of interest is 8%. Excel and BMO prepare financial statements in accordance with IFRS. For each of the following independent situations prepare the journal entry that both Excel and BMO would on their books. a. BMO agrees to accept Excel common shares valued at $1,000,000 as settlement of the debt. b. BMO agrees to accept land as settlement of the debt. The land is on the books of Excel for $500,000 and has a market value of $1,250,000. c. BMO agrees to modify the terms so that Excel is not paying any interest on the note for the remaining two years. d. BMO agrees to reduce the principal balance to $1,000,000 and requires interest only payments for the next…Early in 2020, Cheyenne Equipment Company sold 500 Rollomatics at $5,400each. During 2020, Cheyenne spent $22,000servicing the 2-year assurance warranties that accompany the Rollomatic. All sales transactions are on a cash basis. (a) Prepare 2020 entries for Cheyenne. Assume that Cheyenne estimates the total cost of servicing the warranties in the second year will be $37,000. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit
- On 15 April 2021, Growth Realty Ltd purchased a piece of equipment worth $200,000 by accepting a 6 - month discounted bank bill. The bill has a face value of $209,000 and is due for settlement on 15 October 2023. Required: (a) State the items and amounts, if any, that would appear in each of Growth Realty Ltd's financial statements on 30 June 2023 pertaining to the discounted bill. Provide your working process. (1) Income statement items) and amount(s): (i) Balance sheet items) and amounts): (ili) Cash flow statement items) and amount(s) ):Jem Riane Delos Reyes Bank granted a loan of P3,000,000 to a borrower on January 1, 2021. The terms of the loan were payment in full on December 31, 2026 plus annual interest payment at 8% every December 31. The first interest payment was made on December 31, 2021. However, on December 31, 2021, due to financial difficulties, the borrower informed Freetown Bank that it would probably miss the interest payments for the next two years. After that, the borrower expects to resume the annual interest payment but the principal would be paid on December 31, 2027 or one year late with interest paid for that additional year. Accordingly, the payments from the borrower are scheduled as follows: Date of Flow Cash Flow Amount 12/31/2022 No interest payment Nil 12/31/2023 No interest payment Nil 12/31/2024 Interest payment 12/31/2025 Interest payment 12/31/2026 Interest payment 12/31/2027 Interest payment P 240,000 240,000 240,000 240,000 3,000,000 Principal payment 34. The carrying amount of the…On January 1, 2021. This Company acquired a machine by issuing a 3-year, 3%, P4,000,000 note payable. Principal is due on January 1, 2024 but interests are to be paid annually. The prevailing interest rate for this type of note is 12%. How much is the carrying amount of the note on initial recognition?
- The Electric Car Corporation borrowed $3,000,000 from the Bank of Walnut Creek on October 1, 2021. The loan was from an SBA (Small Business Administration) program that required interest only payments annually at the low rate of 1.75%. At the end of 5 years, on October 1, 2026 the entire loan of $3,000,000 must be repaid. In the event it is not repaid, the interest rate of 1.75% will be increased retroactively at a rate of 7.5%. In order to assure that the loan can be repaid on October 1, 2026, the Chief Financial Officer wants to set up a special fund to contribute to each and every year in order to have sufficient funds to repay the loan in full on October 1, 2026. The Investment firm of J. Edward and Associates of Emeryville, California has an investment fund available that has an annual fixed return of 5%. The Electric Car Corporation wants to start making an annual deposit to the fund beginning in one year starting on October 1, 2022, and for each of the next three years of…[The following information applies to the questions displayed below.] On January 1, 2018, Brown Co. borrowed cash from First Bank by issuing a $100,000 face value, four-year term note that had an 8 percent annual interest rate. The note is to be repaid by making annual cash payments of $30,192 that include both interest and principal on December 31 of each year. Brown used the proceeds from the loan to purchase land that generated rental revenues of $52,000 cash per year. b. Organize the information in accounts under an accounting equation. (Round your answers to the nearest whole dollar amount. Enter any decreases to account balances with a minus sign. If there is no effect on the Accounts Titles / Retained Earnings, leave the cell blank.) BROWN CO. Effect of Events on the Accounting Equation 2018, 2019, 2020 and 2021 Stockholders Equity Retained Earnings Assets = Liabilities Accounts Titles / Event Retained Earnings Notes Payable Cash Land 2018 1/1 1/1 %3D 12/31 12/31 Bal. 2019 Beg.…Kalibo Bank loaned P5,000,000 to Caticlan Company on January 1, 2021. The terms of the loan require principal payments of P 1,000,000 each year for 5 years plus interest at 8%. The first principal and interest payment is due on January 1, 2021. Caticlan Company made the required payments during 2022 and 2023. However, during 2023 Caticlan Company began to experience financial difficulties, requiring the Kalibo bank to reassess the collectibility of the loan. On December 31, 2020, the Kalibo bank has determined that the remaining principal payment will be collected as originally scheduled but the collection of the interest is unlikely. Kalibo Bank did not accrue the interest on Dec. 21, 2023. Present value of 1 at 8%:For one period 0.93For two periods 0.86 For three periods 0.79 1. What is the impairment loss for 2023?2. What is the interest income for 2024?3. What is the carrying amount of the loan receivable on December 31, 2024?
- Holly Springs, Incorporated contracted with Coldwater Corporation to have constructed a custom-made lathe. The machine was completed and ready for use on January 1, 2024. Holly Springs paid for the lathe by issuing a $300,000 note due in three years. Interest, specified at 2%, was payable annually on December 31 of each year. The cash market price of the lathe was unknown. It was determined by comparison with similar transactions for which 6% was a reasonable rate of interest. Holly Springs uses the effective interest method of amortization. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Required:1.Prepare the journal entry on January 1, 2024, for Holly Springs’ purchase of the lathe. 2.Prepare an amortization schedule for the three-year term of the note. 3.Prepare the journal entries to record (a) interest for each of the three years and (b) payment of the note at maturity.Early in 2020, Larkspur Equipment Company sold 600 Rollomatics at $5,800 each. During 2020, Larkspur spent $21,000 servicing the 2-year assurance warranties that accompany the Rollomatic. All sales transactions are on a cash basis. Prepare 2020 entries for Larkspur assuming that the warranties are not an integral part of the sale (a service-type warranty). Assume that of the sales total, $58,000 relates to sales of warranty contracts.Warranty costs incurred in 2020 were $21,000. Estimate revenues to be recognized on a straight-line basis. Date Account Titles and Explanation Debit CreditUse the following information for the next two questions. Funan Industries purchases new specialized manufacturing equipment on July 1, 2019. The equipment cash price is P79,000. Funan signs a deferred payment contract that provides for a down payment of P10,000 and an 8-year note for P103,472. The note is to be paid in 8 equal annual payments of P12,934. The payments include 10% interest and are made on June 30 of each year, beginning June 30, 2020. (1) The carrying amount of the note payable on December 31, 2020 is a. P66,115 b. P62,966 c. P59,818 d. P56,329 (2) The total interest expense for the year ended December 31, 2020 is a. P6,900 b. P6,612 c. P6,599 d. P5,982
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