Instructions On January 1, 2019, the Porter Corporation issued a five-year, non-interest-bearing, $44,000 note to Longshore Corporation in exchange for used equipment. Neither the fair market value of the equipment nor that of the note is determinable. The incremental borrowing rate of Porter is 12% and the incremental borrowing rate of Longshore is 10%. Present value factors for n = 5 years are Interest Rate PV of $1 10% 0.620921 12% 0.567427 Required: a. Prepare the journal entry to record the issuance of the note by Porter on January 1, 2019. b. Prepare the journal entry to record the interest expehse on December 31, 2019. C. Prepare the journal entry to record the interest expense on December 31, 2020.

Instructions On January 1, 2019, the Porter Corporation issued a five-year, non-interest-bearing, $44,000 note to Longshore Corporation in exchange for used equipment. Neither the fair market value of the equipment nor that of the note is determinable. The incremental borrowing rate of Porter is 12% and the incremental borrowing rate of Longshore is 10%. Present value factors for n = 5 years are Interest Rate PV of $1 10% 0.620921 12% 0.567427 Required: a. Prepare the journal entry to record the issuance of the note by Porter on January 1, 2019. b. Prepare the journal entry to record the interest expehse on December 31, 2019. C. Prepare the journal entry to record the interest expense on December 31, 2020.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Question: The interest income to be recognized in 2022 is? Please include solutions. Thank you!
s
Cheyenne Corp. borrowed $1080000 from National Bank on May 31, 2019. The 3-year, 7% note required annual payments of $411536 beginning May 31, 2020. The total amount of interest to be paid over the life of the loan is O $75600. O $154608. O $301688. O $226800.
Hot issue company sold its machine with a carrying amount of P2,000,000 in exchange for 2,500,000 non-interest bearing note that requires five annual payment of 500,000 starting on January 1, 2022 the market interest for similar notes was 10% and the relevant present value factors are:present value of a single payment at 10% for 5 periods 0.621present value of an ordinary annuity of 1 at 10% for 5 periods 3.791present value of annuity due of 1 at 10% for 5 periods 4.170how much is the gain or loss on sale of machine?a. 104,500 gainb. 85,000 lossc. 85,000 gaind. 104,500 loss
XYZ Company is a dealer of equipment. On January 1 2020, the entity sold an equipment in exchange for non-interest bearing note requiring three annual payments of P500,000. The first payment was made on December 31, 2020. The market interest rate for similar notes was 9% PV of 1 at 9% for 3 periods 0.772183 PV of an ordinary annuity of 1 at 9% for 3 periods 2.531295 Required: a. Complete the amortization table Date Annual Collection Interest Income Principal Present Value Jan 1, 2020 1,265,647.33 Dec. 31 2020 _____________ _____________ _________ ___________ Dec. 31 2021 _____________ _____________ __________ ___________ Dec. 31 2022 ______________ _____________ __________ 0.00 b. Provide the journal entries to record the sale of equipment on January 1,…
Sagar
For items 15 to 17 BDO Bank loaned P7,500,000 to a borrower on January 1, 2023. The terms of the loan were payment in full on December 31, 2027 plus annual interest payment at 12% beginning December 31, 2023. The interest payment was made as scheduled on December 31, 2023. However, due to financial setbacks, the borrower was unable to make the December 31, 2024 interest payment. The bank considered the loan impaired and projected the cash flows from the loan on December 31, 2024. The bank had accrued the interest on December 31, 2024. Date of cash flow December 31, 2025 December 31, 2026 December 31, 2027 December 31, 2028 Amount projected December 31, 2023 Present value of 1 at 12% P500,000 One period .89 1,000,000 Two periods .80 2,000,000 Three periods.71 4,000,000 Four periods .64 What amount should be recognized as impairment loss for 2024?
On January 2, 2020, Magsaysay Company sold equipment with a carrying amount of P400,000 in exchange for a P600,000 4-year non-interest- bearing note due January 2, 2024. There was no established exchange price for the equipment. The prevailing rate of interest for a note of this type at January 2, 2020 was 10%. What is the carrying value of the note receivable as of December 31, 2022 Statement of Financial Position? * Your answer
On April 1, 2021, ABC CO. issued a 9% interest bearing note with a face amount of P 30,000,000 for the purchase of a machine. The note is payable in five equal annual installments starting on March 31,2022. Interest is payable annually base on the remaining balance. There is no established cash price for the equipment. The prevailing market rate of interest for a note of this type is 12%.How much is the interest expense for the year 2023?
On January 1, 2021, The Corporation sold goods to Adobo Company. Adobo signed a noninterest-bearing note requiring payment of P600,000 annually for seven years. The first payment was made on January 1, 2021.The prevailing rate of interest for this type of note at date of issuance was 10%.· PV of an ordinary annuity of 1 at 10% for 6 period- 4.36· PV of an ordinary annuity of 1 at 10% for 7 period- 4.87What is the carrying amount of the note receivable on January 1, 2021?
4. On April 1, 2021, XYZ CO. issued a 9% interest bearing note with a face amount of P 30,000,000 for the purchase of a machine. The note is payable in five equal annual installments starting on March 31,2022. Interest is payable annually base on the remaining balance. There is no established cash price for the equipment. The prevailing market rate of interest for a note of this type is 12%. How much is the interest expense for the year 2022?
What is the carrying amount of the note as of December 31, 2022