Icicle Inc. buys and sells photocopy equipment that are used in businesses across Ontario. The company follow IFS. Unit selling prices range from $10,000 to $100,000. O O O O O • Icicle Inc. sells a printing machine to Frosty Inc. on June 14th, 2020. The selling price for the machine is usually $120,000. Icicle Inc. will also install the machine. The estimated fair value of installing the photocopy system is $5,000. Icicle Inc. sold the machine and installation to Frosty Inc. for $122,000. The machine cost Icicle Inc. $58,000. Frosty Inc. is obligated to pay Icicle Inc. $50,000 upon delivery of the machine and the balance on August 15th. Icicle Inc. delivers the machine on July 1st, 2020, and completes the installation of the machine on July 15th, 2020. On August 15 Frosty Inc. informs Icicle Inc. that they will be not be able to pay their account that is due. The two parties enter into an agreement that the account will be converted into a non-interest bearing promissory note to be repaid in one year from now. Frosty Inc. borrows fund at a rate of 5%. Icicle Inc. has various loans at 7% interest. The company's year end is December 31st Prepare the journal entries for 2020 and 2021. If there is no entry be sure to state no entry. Hint remember to allocate the revenue among the different performance obligations and then use this information when you prepare the journal entries. In your answer do not use the discount on notes account.
Icicle Inc. buys and sells photocopy equipment that are used in businesses across Ontario. The company follow IFS. Unit selling prices range from $10,000 to $100,000. O O O O O • Icicle Inc. sells a printing machine to Frosty Inc. on June 14th, 2020. The selling price for the machine is usually $120,000. Icicle Inc. will also install the machine. The estimated fair value of installing the photocopy system is $5,000. Icicle Inc. sold the machine and installation to Frosty Inc. for $122,000. The machine cost Icicle Inc. $58,000. Frosty Inc. is obligated to pay Icicle Inc. $50,000 upon delivery of the machine and the balance on August 15th. Icicle Inc. delivers the machine on July 1st, 2020, and completes the installation of the machine on July 15th, 2020. On August 15 Frosty Inc. informs Icicle Inc. that they will be not be able to pay their account that is due. The two parties enter into an agreement that the account will be converted into a non-interest bearing promissory note to be repaid in one year from now. Frosty Inc. borrows fund at a rate of 5%. Icicle Inc. has various loans at 7% interest. The company's year end is December 31st Prepare the journal entries for 2020 and 2021. If there is no entry be sure to state no entry. Hint remember to allocate the revenue among the different performance obligations and then use this information when you prepare the journal entries. In your answer do not use the discount on notes account.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Icicle Inc. buys and sells photocopy equipment that are used in businesses across Ontario. The company follow IFS.
Unit selling prices range from $10,000 to $100,000.
O
• Icicle Inc. sells a printing machine to Frosty Inc. on June 14th, 2020. The selling price for the machine is
usually $120,000.
Icicle Inc. will also install the machine. The estimated fair value of installing the photocopy system is $5,000.
Icicle Inc. sold the machine and installation to Frosty Inc. for $122,000. The machine cost Icicle Inc. $58,000.
Frosty Inc. is obligated to pay Icicle Inc. $50,000 upon delivery of the machine and the balance on August
15th.
O
O
O
O
Icicle Inc. delivers the machine on July 1st, 2020, and completes the installation of the machine on July 15th,
2020.
On August 15 Frosty Inc. informs Icicle Inc. that they will be not be able to pay their account that is due. The two
parties enter into an agreement that the account will be converted into a non-interest bearing promissory note to be
repaid in one year from now. Frosty Inc. borrows fund at a rate of 5%. Icicle Inc. has various loans at 7% interest. The
company's year end is December 31st
Prepare the journal entries for 2020 and 2021. If there is no entry be sure to state no entry. Hint remember to allocate
the revenue among the different performance obligations and then use this information when you prepare the journal
entries. In your answer do not use the discount on notes account.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education