Headlands Limited owes $220,000 to Teal Mountain Inc. on a 10-year, 11% note due on December 31, 2020. The note was issued at par. Because Headlands is in financial trouble, Teal Mountain Inc. agrees to extend the maturity date to December 31, 2022, reduce the principal to $170,000, and reduce the interest rate to 4%, payable annually on December 31. The market rate is currently 4%. Headlands prepares financial statements in accordance with IFRS. Using (1) factor tables, (2) a financial calculator, or (3) Excel function PV, prepare the journal entries on Headlands's books on December 31, 2020, 2021, and 2022. (Hint: Refer to Chapter 3 for tips on calculating.) (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to O decimal places, e.g. 5,275. Credit account titles are automatically indented when the 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.)
Headlands Limited owes $220,000 to Teal Mountain Inc. on a 10-year, 11% note due on December 31, 2020. The note was issued at par. Because Headlands is in financial trouble, Teal Mountain Inc. agrees to extend the maturity date to December 31, 2022, reduce the principal to $170,000, and reduce the interest rate to 4%, payable annually on December 31. The market rate is currently 4%. Headlands prepares financial statements in accordance with IFRS. Using (1) factor tables, (2) a financial calculator, or (3) Excel function PV, prepare the journal entries on Headlands's books on December 31, 2020, 2021, and 2022. (Hint: Refer to Chapter 3 for tips on calculating.) (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to O decimal places, e.g. 5,275. Credit account titles are automatically indented when the 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.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
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Prepare Jornal entries
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Transcribed Image Text:Headlands Limited owes $220,000 to Teal Mountain Inc. on a 10-year, 11% note due on December 31, 2020. The note was issued at
par. Because Headlands is in financial trouble, Teal Mountain Inc. agrees to extend the maturity date to December 31, 2022, reduce
the principal to $170,000, and reduce the interest rate to 4%, payable annually on December 31. The market rate is currently 4%.
Headlands prepares financial statements in accordance with IFRS.
Using (1) factor tables, (2) a financial calculator, or (3) Excel function PV, prepare the journal entries on Headlands's books on
December 31, 2020, 2021, and 2022. (Hint: Refer to Chapter 3 for tips on calculating.) (For calculation purposes, use 5 decimal places as
displayed in the factor table provided and round final answers to O decimal places, e.g. 5,275. Credit account titles are automatically indented
when the 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.)
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