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Note receivable from sale of division Note receivable from officer 1. $1,500,000 Transactions during 2020 and other information relating to Waterway's long-term receivables were as follows. 2 405,200 The $1,500,000 note receivable is dated May 1, 2019, bears interest at 9%, and represents the balance of the consideration received from the sale of Waterway's electronics division to New York Company. Principal payments of $500,000 plus appropriate interest are due on May 1, 2020, 2021, and 2022. The first principal and interest payment was made on May 1,2020. Collection of the note installments is reasonably assured. The $405,200 note receivable is dated December 31, 2019, bears interest at 8%, and is due on December 31, 2022. The note is due from Sean May, president of Waterway Inc. and is collateralized by 10.130 shares of Waterway's common stock. Interest is payable annually on December 31, and all interest payments were paid on their due dates through December 31, 2020. The quoted market price of Waterway's common stock was $46 per share on December 31, 2020.

Note receivable from sale of division Note receivable from officer 1. $1,500,000 Transactions during 2020 and other information relating to Waterway's long-term receivables were as follows. 2 405,200 The $1,500,000 note receivable is dated May 1, 2019, bears interest at 9%, and represents the balance of the consideration received from the sale of Waterway's electronics division to New York Company. Principal payments of $500,000 plus appropriate interest are due on May 1, 2020, 2021, and 2022. The first principal and interest payment was made on May 1,2020. Collection of the note installments is reasonably assured. The $405,200 note receivable is dated December 31, 2019, bears interest at 8%, and is due on December 31, 2022. The note is due from Sean May, president of Waterway Inc. and is collateralized by 10.130 shares of Waterway's common stock. Interest is payable annually on December 31, and all interest payments were paid on their due dates through December 31, 2020. The quoted market price of Waterway's common stock was $46 per share on December 31, 2020.

FINANCIAL ACCOUNTING
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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Waterway Inc. had the following long-term receivable account balances at December 31, 2019. Note receivable from sale of division Note receivable from officer Transactions during 2020 and other information relating to Waterway's long-term receivables were as follows. 1. 2 3. 4. (a) $1,500,000 405,200 (b) The $1,500,000 note receivable is dated May 1, 2019, bears interest at 9%, and represents. the balance of the consideration received from the sale of Waterway's electronics division to New York Company. Principal payments of $500,000 plus appropriate interest are due on May 1, 2020, 2021, and 2022. The first principal and interest payment was made on May 1, 2020, Collection of the note installments is reasonably assured. (s) The $405,200 note receivable is dated December 31, 2019, bears interest at 8%, and is due on December 31, 2022. The note is due from Sean May, president of Waterway Inc. and ist collateralized by 10.130 shares of Waterway's common stock. Interest is payable annually on December 31, and all interest payments were paid on their due dates through December 31, 2020. The quoted market price of Waterway's common stock was $46 per share on December 31, 2020. On April 1, 2020, Waterway sold a patent to Pennsylvania Company in exchange for a $117,000 zero-interest-bearing note due on April 1, 2022. There was no established exchange price for the patent, and the note had no ready market. The prevailing rate of interest for a note of this type at April 1, 2020, was 11%. The present value of $1 for two periods at 11% is 0.812 (use this factor). The patent had a carrying value of $46,800 at January 1, 2020, and the amortization for the year ended December 31, 2020, would have been $9,360. The collection of the note receivable from Pennsylvania is reasonably assured. Prepare the long-term receivables section of Waterway's balance sheet at December 31, 2020. (Round answers to O decimal places, eg. 5,125.) On July 1, 2020, Waterway sold a parcel of land to Splinter Company for $200,000 under an installment sale contract. Splinter made a $60,000 cash down payment on July 1, 2020, and signed a 4-year 10% note for the $140,000 balance. The equal annual payments of principal and interest on the note will be $44,166 payable on July 1, 2021, through July 1, 2024. The land could have been sold at an established cash price of $200,000. The cost of the land to Waterway was $150.000. Circumstances are such that the collection of the installments on the note is reasonably assured. WATERWAY INC. Long-Term Receivables Section of Balance Sheet 5 Prepare a schedule showing the current portion of the long-term receivables and accrued interest receivable that would appear in Waterway's balance sheet at December 31, 2020. (Round answers to O decimal places, eg. 5,129.) WATERWAY INC. Selected Balance Sheet Balances 5 $ Prepare a schedule showing interest revenue from the long-term receivables that would appear on Waterway's income statement for the year ended December 31, 2020. (Round answers to 0 decimal places, e.g. 5,125.) WATERWAY INC. Interest Revenue from Long-Term Receivables $
Transcribed Image Text:Waterway Inc. had the following long-term receivable account balances at December 31, 2019. Note receivable from sale of division Note receivable from officer Transactions during 2020 and other information relating to Waterway's long-term receivables were as follows. 1. 2 3. 4. (a) $1,500,000 405,200 (b) The $1,500,000 note receivable is dated May 1, 2019, bears interest at 9%, and represents. the balance of the consideration received from the sale of Waterway's electronics division to New York Company. Principal payments of $500,000 plus appropriate interest are due on May 1, 2020, 2021, and 2022. The first principal and interest payment was made on May 1, 2020, Collection of the note installments is reasonably assured. (s) The $405,200 note receivable is dated December 31, 2019, bears interest at 8%, and is due on December 31, 2022. The note is due from Sean May, president of Waterway Inc. and ist collateralized by 10.130 shares of Waterway's common stock. Interest is payable annually on December 31, and all interest payments were paid on their due dates through December 31, 2020. The quoted market price of Waterway's common stock was $46 per share on December 31, 2020. On April 1, 2020, Waterway sold a patent to Pennsylvania Company in exchange for a $117,000 zero-interest-bearing note due on April 1, 2022. There was no established exchange price for the patent, and the note had no ready market. The prevailing rate of interest for a note of this type at April 1, 2020, was 11%. The present value of $1 for two periods at 11% is 0.812 (use this factor). The patent had a carrying value of $46,800 at January 1, 2020, and the amortization for the year ended December 31, 2020, would have been $9,360. The collection of the note receivable from Pennsylvania is reasonably assured. Prepare the long-term receivables section of Waterway's balance sheet at December 31, 2020. (Round answers to O decimal places, eg. 5,125.) On July 1, 2020, Waterway sold a parcel of land to Splinter Company for $200,000 under an installment sale contract. Splinter made a $60,000 cash down payment on July 1, 2020, and signed a 4-year 10% note for the $140,000 balance. The equal annual payments of principal and interest on the note will be $44,166 payable on July 1, 2021, through July 1, 2024. The land could have been sold at an established cash price of $200,000. The cost of the land to Waterway was $150.000. Circumstances are such that the collection of the installments on the note is reasonably assured. WATERWAY INC. Long-Term Receivables Section of Balance Sheet 5 Prepare a schedule showing the current portion of the long-term receivables and accrued interest receivable that would appear in Waterway's balance sheet at December 31, 2020. (Round answers to O decimal places, eg. 5,129.) WATERWAY INC. Selected Balance Sheet Balances 5 $ Prepare a schedule showing interest revenue from the long-term receivables that would appear on Waterway's income statement for the year ended December 31, 2020. (Round answers to 0 decimal places, e.g. 5,125.) WATERWAY INC. Interest Revenue from Long-Term Receivables $
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