Problem 6Ebony Company sold an office equipment with a carrying amount of 739,000, receiving anoninterest-bearing note due in three years with a face amount of 1,300,000. There is noestablished market value for the equipment. The interest rate on similar obligations is estimated at12%. The present value of 1 at 12% for three periods is .712.What amount should be reported as gain or loss on the sale and interest income for the first year?Gain (loss)Interest Incomea. 200,000. 288,000b. 168,600. 110,072c. 186,600. 111,072d. 110,072. 186,600

Notes receivable refers to asset accounts associated with underlying promissory notes that lay down…

Answered: Ebony Company sold an office equipment…

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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Canliss Mining Company borrowed money from a local bank. The note the company signed requires five annual installment payments of $13,000 not due for three years. The interest rate on the note is 4%. (FV of $1, PV of $1, FVA of $1, PVA of $1, EVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) What amount did Canliss borrow? (Do not round intermediate calculations. Round your final answers to nearest whole dollar amount.) Step 1: Calculate the PV of the Ordinary Annulty Component: Payment: 13,000 Present Value: Step 2: Convert the Annulty to a Single Sum: Payment: 2$ 13,000 n3D Present Value:
Hemingway Company purchases equipment by issuing a 7-year, $210,000 non-interest-bearing note, when the market rate for this type of note is 7%. Hemingway will pay off the note with equal payments to be made at the end of each year. Required: Prepare the journal entry to record Hemingway’s acquisition of the equipment.
Spinner Ltd is a bedding manufacturer that achieved a net profit before income tax of $1 842 000 for the year ended 30 June 2013. Spinner Ltd has a major loan from Greater Western Bank (GWB) for financing daily and other operations, carrying an interest rate of 7 per cent per annum. Spinner Ltd is required to adhere to financial covenants imposed by GWB and in the event that the covenants are breached the annual interest rate on the loan will increase to 10 per cent. Spinner Ltd has disclosed these details in the notes to the financial report. You are satisfied that the note in the financial report complies fully with the accounting standards; however, you form the view that your audit report should draw attention to this note. In addition, you have identified the following matters from your audit work: 1. Spinner Ltd.’s inventory amounted to $1 941 000 on 30 June 2013. In order to move some of its old stock, in July 2013 the company sold 25 per cent of its finished goods inventories…
(A) How much should be recorded as the purchase price of the individual PPE items: 1. Equipment has an invoice price of P1,000,000, and a credit term of 2/30, n/60. Cash discount was not taken. 2. Paid cash of P200,000 and issued a note for the purchase of a machinery. The note has a face value of P1,000,000 due after three years and an effective interest rate of 7%. 3. Five units of equipment was purchased through the issuance of 1,000 pieces of P1,000 par-value shares. Each equipment has a fair value of P300,000 while a share is valued at P1400. 4. Issued bonds with face value of P5,000,000 and fair value of P5,100,000 to purchase equipment with a fair value of P4,900,000. 5. The old equipment has an original cost of P1,500,000, accumulated depreciation of P600,000, and fair value of P1,000,000. The new equipment obtained through exchange has a fair value of P1,200,000. The balance was
Bay Lake Mining Ltd. purchases earth-moving equipment on 1 August 20X6 and signs a three-year note with the supplier, agreeing to pay $430,000 on 31 July 20X9. There is no interest in the note. The equipment purchased does not have a readily determinable market value. (PV of $1. PVA of $1, and PVAD of $1.) (Use appropriate factor(s) from the tables provided.) Required: 1-a. Does Bay Lake Mining Ltd. actually have a no-Interest loan? 1-b. This part of the question is not part of your Connect assignment. 2. Calculate the present value of the note payable, using an interest rate of 7%. (Round time value factor to 5 decimal places and final answer to the nearest dollar amount.) Present value Year 3. This part of the question is not part of your Connect assignment. 4. Prepare a table that shows the balance of the note payable and Interest expense over the life of the note. (Round your final answers to the nearest dollar amount.) No 1 Yes No 2 1 2 3 3 Answer is complete and correct. $…
Harper Co. funds the acquisition of equipment on January 1, year 8 by issuing a $15,000 non-interest-bearing note payable. Beginning on December 31, year 8, the debt will be paid off in ten equal yearly payments. The market rate of interest for this sort of note is 5%. Given the facts below, how much should Harper Co. report the equipment on its December 31, year 8 balance sheet? For ten periods, the present value of $1 at 5% is 0.61391. The present value of a $1 regular annuity at 5% for ten periods is 7.72173. The current value of a $1 annuity payable in ten periods at 5% is 8.10782 8.10782
Marin Corporation purchased a truck by issuing an $113,600, 4-year, zero-interest-bearing note to Equinox Inc. The market rate of interest for obligations of this nature is 9%. Prepare the journal entry to record the purchase of this truck. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answers to O decimal places, e.g. 5,275. 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.) Account Titles and Explanation Debit Credit
During your review of the records of X Factor Corporation for the year 20A, you noted that X Factor sold a machine with carrying amount of P640,000 (cost is P1.6M) on June 30, 20A. X Factor received an P800,000 non-interest bearing note due in 3 years. There is no established market value for the machine. The yield rate for this type of note is 12%. X Factor recorded the transaction by debiting Note receivable for P800,000 and crediting Machinery for P640,000 and Gain on sale for the difference. Interest income for the year ended December 31, 20B is
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Garcia Corporation purchased a truck by issuing an $80,000, 4-year, zero-interest-bearing note to Equinox Inc. The market rate of interest for obligations of this nature is 10%. Prepare the journal entry to record the purchase of this truck.
Sheridan Corporation purchased a truck by issuing an $91,200, 4-year, zero-interest-bearing note to Equinox Inc. The market rate of interest for obligations of this nature is 10%. Prepare the journal entry to record the purchase of this truck. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answers to O decimal places, e.g. 5,275. 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.) Account Titles and Explanation Debit Credit
On January 1, year 8 Harper Company finances the purchase of equipment by issuing a $15,000 non-interest-bearing note payable. The note will be paid off in 10 equal annual installments beginning on December 31, year 8. The market rate of interest for notes of this type is 5%. Considering the information below, at what amount should Harper Company report the equipment on its balance sheet dated December 31, year 8? The present value of $1 at 5% for 10 periods 0.61391 The present value of an ordinary annuity of $1 at 5% for 10 periods 7.72173 The present value of an annuity due of $1 at 5% for 10 periods is 8.10782 8.10782 Multiple Choice $9,209 $11,583 $12,162 $15,000

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