On January 1, 2025, Sunland Company makes the two following acquisitions 1 Purchases and having a fair value of $250,000.00 by issuing a 5-year, zero-interest-bearing promissory note in the face amount of $421.265. 2 Purchases equipment by issuing a 6%, 9-year promissory note having a maturity value of $380,000.00 (interest payable annually) The company has to pay 11% interest for funds from its bank Click here to view factor tables Record the two journal entries that should be recorded by Sunland Company for the two purchases on January 1, 2025 (b) Record the interest at the end of the first year on both notes using the effective interest method. (Round present value factor calculations to 5 decimal places, eg 1.25124 and the frial anwer to 2 decimal places, eg. 58,971.25. If no entry is required, select "No Entry for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually List all debit entries before credit entries) No. Date Account Titles and Explanation Debit

On January 1, 2025, Sunland Company makes the two following acquisitions 1 Purchases and having a fair value of $250,000.00 by issuing a 5-year, zero-interest-bearing promissory note in the face amount of $421.265. 2 Purchases equipment by issuing a 6%, 9-year promissory note having a maturity value of $380,000.00 (interest payable annually) The company has to pay 11% interest for funds from its bank Click here to view factor tables Record the two journal entries that should be recorded by Sunland Company for the two purchases on January 1, 2025 (b) Record the interest at the end of the first year on both notes using the effective interest method. (Round present value factor calculations to 5 decimal places, eg 1.25124 and the frial anwer to 2 decimal places, eg. 58,971.25. If no entry is required, select "No Entry for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually List all debit entries before credit entries) No. Date Account Titles and Explanation Debit

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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On Jan. 1, 2021, an entity bought investment in bonds and classified it as an investment at amortized cost. It has a total face value of P5,000,000 and an acquisition cost of P5,088,700. It pays an interest rate of 6%, to be paid semiannually every June 30 and Dec. 31. It matures on Dec. 31, 2024. The acquisition resulted to an effective interest rate of 5.5%. On Dec. 31, 2021, the bonds have a total fair value of P5,010,000. what is the Investment in Bonds as of acquisition?
On January 1, 2023 AAA Company acquired BBB Company 10%, P600,000 bonds for P621,300. The bonds which pays interest on every June 30 and December 31. The bond will mature on January 1, 2028 and were purchased to yield 9%. The business model of the AAA Company in managing investment is to hold the asset in order to collect the contractual cash flows. 1. how much is the interest income in 2023 2.how much is the carrying amount of the bonds at december 31,2023 3.how much is the unamortized portion of premium on december 31, 2024 4. how much cash to be debited on december 31,2024
Feherty, Incorporated accounts for its investments under IFRS No. 9 and purchased the following investments during December 2024: Eighty of Donald Company’s $1,000 bonds. The bonds pay semiannual interest, return principal in 10 years, and include no other cash flows or other features. Feherty plans to hold 20 of the bonds to collect contractual cash flows over the life of the investment and to hold 60, both to collect contractual cash flows but also to sell them if their price appreciates sufficiently. Subsequent to Feherty’s purchase of the bonds, but prior to December 31, the fair value of the bonds increased to $1,020 per bond, and Feherty sold 20 of the 60 bonds. Feherty also sold 10 of the 20 bonds it had planned to hold to collect contractual cash flows over the life of the investment. The fair value of the bonds remained at $1,020 as of December 31, 2024. $25,300 of Watson Company common stock. Feherty does not have the ability to significantly influence the operations of…
On January 1, 2020, HIBISCUS Company purchased 4,000 of ₱1,000 face value, 10% bonds of IXORA Company for ₱4,270,600. The bonds will mature on January 1, 2025 and pay interest semi-annually on January 1 and July 1. Bonds effective interest rate is 8%. HIBISCUS has a business model of collecting all the contractural cash flows related to the instrument. How much should HIBISCUS report as interest income on the bonds?
Carla Vista Company purchased, on January 1, 2025, as an available-for-sale security, $73,000 of the 10%, 5-year bonds of Tri Town Corporation for $67,737, which provides an 12% return.Prepare Carla Vista’s journal entries for (a) the purchase of the investment, (b) the receipt of annual interest and discount amortization, and (c) the year-end fair value adjustment. (Assume a zero balance in the Fair Value Adjustment account.) The bonds have a year-end fair value of $69,350. Assume effective-interest amortization is used. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 1,225.)
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Dahlia Company purchased a P2,000,000 12% face value bonds, 10 years, on April 1, 2019 for P1,964,600. The bonds are dated April 1, 2019 with interest payable April 1 and October 1. Bond discount is amortized following the effective interest method. The effective interest rate is 12.40%. What is the total amortization for the year 2019? (Answer should be in two decimal places, no comma or peso sign) *
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On January 1, 20X1 Blu Corporation acquired a building for P10M. The entity paid P1M down and signed a non-interest bearing note for the balance. Note is payable in 3 equal annual installment every Dec 31. Prevailing rate for the note of this type is 12%. REQUIRED: Journal entries to record the purchase of the building up to the settlement of the note. Prepare an amortization table. How should the note be presented in the statement of financial position at Dec 31, 20X1?
DEF Company had acquired the following assets: Purchased Equipment on January 1, 2022 with a list price of P1,500,000 and was acquired with the following terms: Trade discount of 10%; Offered cash discount of 2% (which DEF did not take). o 0 -Purchased Machinery on January 1, 2022 under the following terms: Down payment of P150,000; 0 O Issued a non-interest bearing note payable in annual installments of P105,000 starting December 31, 2022. Total face value of the note was P420,000. The cash price equivalent for the machinery was not available. The incremental borrowing rate of DEF was 8%. PVF of P1 ordinary annuity for 4 periods was 3.31. A building was donated by a wealthy shareholder of DEF Company. At the time of donation, the fair value of the building was P15,000,000. DEF incurred necessary costs amounting to P150,000 in relation to the donated building. The cost of the building to the wealthy shareholder was P10,000,000. 0 REQUIREMENTS: What is the initial cost of the equipment?…