Waterway Inc. had the following long-term receivable account balances at December 31, 2019.Note receivable from sale of divisionNote receivable from officerTransactions during 2020 and other information relating to Waterway's long-term receivables wereas follows.1.23.4.(a)$1,500,000405,200(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 divisionto New York Company. Principal payments of $500,000 plus appropriate interest are dueon May 1, 2020, 2021, and 2022. The first principal and interest payment was made on May1, 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 dueon December 31, 2022. The note is due from Sean May, president of Waterway Inc. and istcollateralized by 10.130 shares of Waterway's common stock. Interest is payable annuallyon December 31, and all interest payments were paid on their due dates through December31, 2020. The quoted market price of Waterway's common stock was $46 per share onDecember 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 establishedexchange price for the patent, and the note had no ready market. The prevailing rate ofinterest for a note of this type at April 1, 2020, was 11%. The present value of $1 for twoperiods at 11% is 0.812 (use this factor). The patent had a carrying value of $46,800 atJanuary 1, 2020, and the amortization for the year ended December 31, 2020, would havebeen $9,360. The collection of the note receivable from Pennsylvania is reasonablyassured.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 underan 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 ofprincipal 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 ofthe land to Waterway was $150.000. Circumstances are such that the collection of theinstallments on the note is reasonably assured.WATERWAY INC.Long-Term Receivables Section of Balance Sheet5Prepare a schedule showing the current portion of the long-term receivables and accruedinterest receivable that would appear in Waterway's balance sheet at December 31, 2020.(Round answers to O decimal places, eg. 5,129.)WATERWAY INC.Selected Balance Sheet Balances5$Prepare a schedule showing interest revenue from the long-term receivables that would appearon Waterway's income statement for the year ended December 31, 2020. (Round answers to 0decimal places, e.g. 5,125.)WATERWAY INC.Interest Revenue from Long-Term Receivables$

Name: Waterway Inc. had the following long-term receivable account balances
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Description: Waterway Inc. had the following long-term receivable account balances at December 31, 2019.Note receivable from sale of divisionNote receivable from officerTransactions during 2020 and other information relating to Waterway's long-term receivables w

Solution: 1. The long term receivables section of waterway's balance sheet:…

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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

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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