On December 31, 2009, Mill Co. sold construction equipment to Drew, Inc. for P1,800,00. The equipment had a carrying amount of P1,200,000. Drew paid P300,000 cash on December 31, 2009 and signed a P1,500,000 note bearing interest at 10%, payable in five annual installments of P300,00. Mill appropriately accounts for the sale under the installment method. On December 31, 2010, Drew paid P300,000 principal and P150,000 interest. For the year ended December 31, 2010, what total amount of revenue should Mill recognize from the construction equipment sale and financing?

On December 31, 2009, Mill Co. sold construction equipment to Drew, Inc. for P1,800,00. The equipment had a carrying amount of P1,200,000. Drew paid P300,000 cash on December 31, 2009 and signed a P1,500,000 note bearing interest at 10%, payable in five annual installments of P300,00. Mill appropriately accounts for the sale under the installment method. On December 31, 2010, Drew paid P300,000 principal and P150,000 interest. For the year ended December 31, 2010, what total amount of revenue should Mill recognize from the construction equipment sale and financing?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: American Food Services, Inc., acquired a packaging machine from Barton and Barton Corporation.…

A: Journal entries for the purchase of the machine on January 1 2021Date Account Title and Explaination…

Q: requires alue of money at machinery for $86- value. Cougar d anged the machin

A: Given: Cougar to pay 100,000 identical piece of machinery $86,000 Cougar paid=$10,000 fair…

Q: On January 1, 2021, Bambam Company sold an equipment to Lucas Company which had a carrying value on…

A: A note receivable is an asset account linked to an underlying promissory note that specifies in…

Q: On June 1, 2023, Redwood Manufacturin Co. sold equipment to Caramel Company in exchange for a…

A: Accrual accounting records revenue and expenses when they are earned or incurred, regardless of when…

Q: On January 1, 2021, Marigold Corp. sold property to Cullumber Company which originally cost Marigold…

A: Option (d). $345,693 is the correct answer.

Q: On June 1, 2021, Blossom & Sons sold equipment to James Landscaping Service in exchange for a…

A: Note means an instrument acknowledging as debt due from one party to another party. It carry defined…

Q: On January 1, 2008, Rex Co. sold a used machine to Lake, Inc. for P525,000. On this date, the…

A: This question deals with the installment sales method. In installment sales method, gross profit is…

Q: Magenta Company purchased a machine from Pink Corporation on October 31, 2021. In payment for the…

A: Income statement shows company's income and expenses over a period of time.Revenues, Expenses, and…

Q: On January 1, 2021, Mumbleford & Sons Co. sold equipment to Mulligan Care Service in exchange for a…

A: Zero coupon bonds means those bonds which were issued for money or any assets but for which no…

Q: On January 1, 20x9, Fairness Company sold a tract of land that was acquired years ago for P…

Q: On 1 July 2019, Cassblanka Ltd sells a construction vehicle to Tradon Ltd. The vehicle cost…

Question

On December 31, 2009, Mill Co. sold
construction equipment to Drew, Inc. for
P1,800,00. The equipment had a carrying
amount of P1,200,000. Drew paid P300,000
cash on December 31, 2009 and signed a
P1,500,000 note bearing interest at 10%,
payable in five annual installments of
P300,00. Mill appropriately accounts for the
sale under the installment method. On
December 31, 2010, Drew paid P300,000
principal and P150,000 interest. For the year
ended December 31, 2010, what total
amount of revenue should Mill recognize
from the construction equipment sale and
financing?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Correct answer:

VIEW

Explanation:

VIEW

Continued..

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Section 179 Deduction and Modified Accelerated Cost Recovery System (MACRS) Depreciation

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.

Similar questions

Cool Globe Inc. entered into two transactions, as follows: Purchased equipment paying $20,000 at the date of purchase and signing a noninterest-bearing note requiring the balance to be paid in four annual installments of $20,000 on the anniversary date of the contract. Based on Cool Globe's 12% borrowing rate for such transactions, the implicit interest cost is $19,253. Purchased a tract of land in exchange for $10,000 cash that was paid immediately and signed a noninterest-bearing note requiring five $10,000 annual payments. The first annual payment of the note is due in one year. The fair value of the land is $46,000. Required:Prepare the journal entries for these transactions.
On January 1, 2021, Anna Company sold a piece of equipment to Banana Company with a cost of P3,500,000 and accumulated depreciation of P600,000 in exchange for an annual 10% interest-bearing note, P3,000,000. Banana is required to make four equal annual payments of principal plus interest. What is the interest income for the year 2022?
On January 1, 2019, Worthylake Company sold used machinery to Brown Company, accepting a $25,000, non-interest-bearing note maturing on January 1, 2021. Worthylake carried the machinery on its books at a cost of $22,000 and a current book value of $15,000. Neither the fair value of the machinery nor the note was determinable at the time of sale; however, Brown’s incremental borrowing rate was 12%. Required: Prepare the journal entries on Worthylake’s books to record: 1. sale of the machinery 2. related adjusting entries on December 31, 2019, and 2020 3. payment of the note by Brown on January 1, 2021
On January 1, 2022, Lorry Manufacturing Company purchased equipment from Wales Inc. There was no established market price for the equipment which has an 8 year life and no salvage value. Lorry gave Wales a P105,000 zero-interest-bearing note payable in 3 equal annual installments of P35,000, with the first payment due December 31, 2022. The prevailing rate of interest for a note of this type is 8%. The present value of the note at 8% was P90,199. Assuming that Lorry uses the straight-line method of depreciation, what amounts will be reported in the company’s 2022 income statement for depreciation expense of the equipment? P8,750 P11,275 P13,125 P30,066
At the beginning of 2021, VHF Industries acquired a machine with a fair value of $6,774,420 by issuing a four-year, noninterest-bearing note in the face amount of $8 million. The note is payable four annual installments of $2 million at the end of each year. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. What is the effective rate of interest implicit in the agreement? 2. to 4. Prepare the necessary journal entries. When recording the issuance of the installment note record it at its net book value in a single note payable (or receivable) account (no Discount). 5. Suppose the market value of the machine was unknown at the time of purchase, but the market rate of interest for notes of similar risk was 12%. Prepare the journal entry to record the purchase of the machine. Complete this question by entering your answers in the tabs below. Required 1 Required 2 to 4 Interest rate What is the effective…
On January 1, 2021, Glanville Company sold goods to Otter Corporation. Otter signed an installment note requiring payment of $21,500 annually for five 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%. Glanville should record sales revenue in January 2021 of: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Multiple Choice $107,500 $81,502 $89,652 None of these answer choices are correct.
7.On April 1, 2021, Leni Company (a calendar-year company) sold a tract of land that originally cost P400,000. Leni received a P600,000 note as payment for the land. The note is payable in three annual installments of P200,000 beginning March 31, 2022 plus interest at the rate of 4% based on the outstanding balance. At April 1, 2021, the prevailing rate of interest for a similar obligation is 10%. The fair value of the note is derived by discounting all future collections using the prevailing interest rate, thus, amounting to P538,424.How much is the interest revenue for the year ended December 31, 2021?