answer must be correct or i will give down vote At the beginning of 2024, VHF Industries acquired a machine with a fair value of $3,169,870 by issuing a four-year, noninterest-bearingnote in the face amount of $4 million. The note is payable in four annual installments of $1 million at the end of each year.Required:1.What is the effective rate of interest implicit in the agreement?2. to 4. Prepare the necessary journal entries.5. Suppose the market value of the machine was unknown at the time of purchase, but the market rate of interest for notes of similarrisk was 9%. Prepare the journal entry to record the purchase of the machine.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)× Answer is not complete.Complete this question by entering your answers in the tabs below.Req 1Req 2 to 4Req 5What is the effective rate of interest implicit in the agreement?Interestrate10%

1.Using the find x function in your financial calculator, you can solve for the value of r or the…

Answered: At the beginning of 2024, VHF…

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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At the beginning of 2018, VHF Industries acquired a machine with a fair value of $6,074,700 by issuing a fouryear, noninterest-bearing note in the face amount of $8 million. The note is payable in four annual installmentsof $2 million at the end of each year.Required:1. What is the effective rate of interest implicit in the agreement?2. Prepare the journal entry to record the purchase of the machine.3. Prepare the journal entry to record the first installment payment at December 31, 2018.4. Prepare the journal entry to record the second installment payment at December 31, 2019.5. Suppose the market value of the machine was unknown at the time of purchase, but the market rate of interestfor notes of similar risk was 11%. Prepare the journal entry to record the purchase of the machine.
At the beginning of 2021, VHF Industries acquired a machine with a fair value of $6,074,700 by issuing a fouryear, noninterest-bearing note in the face amount of $8 million. The note is payable in four annual installments of $2 million at the end of each year.Required:1. What is the effective rate of interest implicit in the agreement?2. Prepare the journal entry to record the purchase of the machine.3. Prepare the journal entry to record the first installment payment at December 31, 2021. 4. Prepare the journal entry to record the second installment payment at December 31, 2022.5. 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 11%. Prepare the journal entry to record the purchase of the machine.
On January 1, 2021, Diggs Co. lends some money in exchange for a 10% $100,000 10-year note. The market rate for similar notes is 8%. Interest is received semiannually each July 1 and January 1. The financial year ends December 31. Round to the nearest whole number. (Hint: Prepare a partial amortization schedule to July 1, 2023) a. The note is issued at ___________(par / premium / discount) b. The present value of the note is $______________ c. The cash received at July 1, 2021 is $__________________ d. The interest income to Diggs Co. at December 31, 2022 is $_________________ e. The carrying amount of the note at July 1, 2023 is $__________________
Questions # 14-16 are based on the following: On January 1, 2021, Music Angel issued a four-year installment note in the amount of $5,100,000 in exchange for a new machine. The note is to be paid in four equal payments of $1,574,210 at the end of each year. The payments include interest at the rate of 9%. 14. Interest expense will be recorded at December 31, 2021 for: A. $1,324,981 B. $1,115,210 C. $249,229 D. $459,000 15. By how much will the carrying value decrease when the first payment is made? A. $1,574,210 B. $459,000 C. $1,115,210 D. $358,631 16. What is the carrying value at December 31, 2022? A. $2,769,211 B. $5,100,000 C. $3,984,790 D. $1,951,580
On January 1, 2021, Palalay Bus Co. received a 4-year, noninterest bearing note of P1,000,000 in exchange for land with carrying amount of P400,000. The note is due on December 31, 2024. The effective interest rate is 12%. The present value of 1 at 12% for 4 periods is 0.6355.Requirements: 1. Prepare the amortization table. 2. Provide all the necessary journal entries.
On January 1,2022, Ace Company finished landscaping services and accepted in exchange a 10% $400000 promissory note with a due date of December 31,2024. Interest is receivable at December 31 each year. Notes with similar risks have a market rate of interest of 5%. (A.) Determine the value of the following N, I/Y, PMT, FV. B The present value of the note was $_______. (C) Prepare a schedule of Note Discount/Premium Amortization for Ace Company under the effect interest method
At the beginning of 2016, VHF Industries acquired a machine with a fair value of $6,074,700 by issuing a fouryear, noninterest-bearing note in the face amount of $8 million. The note is payable in four annual installments of $2 million at the end of each year. Required: 1. What is the effective rate of interest implicit in the agreement? 2. Prepare the journal entry to record the purchase of the machine. 3. Prepare the journal entry to record the first installment payment at December 31, 2016. 4. Prepare the journal entry to record the second installment payment at December 31, 2017. 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 11%. Prepare the journal entry to record the purchase of the machine.
To finance the purchase of the machine by issuing $6 million, six-year, zero interest-bearing note to the seller on 1 July 2019. The expected interest rate for the note is 5.5%. The company is expected to pay off the note in six $1 million instalments, at every financial year end. The company employs effective interest method. Assume financial year ends December. Calculate the instalment and interest.
LCD Industries purchased a supply of electronic components from Entel Corporation on November 1, 2024. In payment for the $24.7 million purchase, LCD issued a 1-year installment note to be paid in equal monthly payments at the end of each month. The payments include interest at the rate of 24%. Required: 1. & 2. Prepare the journal entries for LCD’s purchase of the components on November 1, 2024 and the first installment payment on November 30, 2024. 3. What is the amount of interest expense that LCD will report in its income statement for the year ended December 31, 2024?
LCD Industries purchased a supply of electronic components from Entel Corporation on November 1, 2024. In payment for the $25.1 million purchase, LCD issued a 1-year installment note to be paid in equal monthly payments at the end of each month. The payments include interest at the rate of 12%. Required: 1. & 2. Prepare the journal entries for LCD's purchase of the components on November 1, 2024 and the first installment payment on November 30, 2024. 3. What is the amount of interest expense that LCD will report in its income statement for the year ended December 31, 2024? Note: Use tables, Excel, or a financial calculator. (FV of $1. PV of $1. EVA of $1, PVA of $1. FVAD of $1 and PVAD of $1) Complete this question by entering your answers in the tabs below. Req 1 and 2 Req 3 Prepare the journal entries for LCD's purchase of the components on November 1, 2024 and the first installment payment on November 30, 2024. Note: Enter your answers in whole dollars. If no entry is required for a…
LCD Industries purchased a supply of electronic components from Entel Corporation on November 1, 2024. In payment for the $25.1 million purchase, LCD issued a 1-year installment note to be paid in equal monthly payments at the end of each month. The payments include interest at the rate of 12%. Questions: 1. & 2. Prepare the journal entries for LCD’s purchase of the components on November 1, 2024 and the first installment payment on November 30, 2024. 3. What is the amount of interest expense that LCD will report in its income statement for the year ended December 31, 2024? 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)
LCD Industries purchased a supply of electronic components from Entel Corporation on November 1, 2024. In payment for the $24.4 million purchase, LCD issued a 1-year installment note to be paid in equal monthly payments at the end of each month. The payments include interest at the rate of 24%. Required: 1. & 2. Prepare the journal entries for LCD's purchase of the components on November 1, 2024 and the first installment payment on November 30, 2024. 3. What is the amount of interest expense that LCD will report in its income statement for the year ended December 31, 2024? 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) Complete this question by entering your answers in the tabs below. Req 1 and 2 Prepare the journal entries for LCD's purchase of the components on November 1, 2024 and the first installment payment on November 30, 2024. Note: Enter your answers in whole dollars. If no entry is required for a…

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