On January 1, 20x1, Otters Co. received a 3-year, noninterest bearing note of P1,200,000 in exchange for equipment with historical cost of P2,000,000 and accumulated depreciation of P700,000. The note is due three equal annual installations beginning on January 1, 20x1 and every January 1 thereafter. The effective interest rate is 10% Requirements: a. Prepare the amortization table. b. How much is the interest income in 20x1? c. How much is the carrying amount of the receivable on Dec. 31, 20x1?
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- On August 1, 2019, Kern Company leased a machine to Day Company for a 6-year period requiring payments of 10,000 at the beginning of each year. The machine cost 40,000 and has a useful life of 8 years with no residual value. Kerns implicit interest rate is 10%, and present value factors are as follows: Present value for an annuity due of 1 at 10% for 6 periods4.791 Present value for an annuity due of 1 at 10% for 8 periods5.868 Kern appropriately recorded the lease as a sales-type lease. At the inception of the lease, the Lease Receivable account balance should be: a. 60,000 b. 58,680 c. 48,000 d. 47,910On January 1, 2018, King Inc. borrowed $150,000 and signed a 5-year, note payable with a 10% interest rate. Each annual payment is in the amount of $39,569 and payment is due each Dec. 31. What is the journal entry on Jan. 1 to record the cash received and on Dec. 31 to record the annual payment? (You will need to prepare the first row in the amortization table to determine the amounts.)PREPARE AN AMORTIZATION TABLE AND FIND HOW MUCH IS THE NET PROCEEDS FOR THE FOLLOWING CASES: Case 1: On December 31, 2019 Triangle company purchase a property by issuing 8% promissory note with face amount of 5,000,000 to yield 10% interest semi annual for 10 years.
- On January 1, 2021, More Co. received a 3-year, noninterest bearing note of P900,000 in exchange for machinery with historical cost of P1,000,000 and accumulated depreciation of P200,000. The note is due on December 31, 2023. The effective interest rate is 12%. The present value of 1 at 12% for 3 periods is 0.7118.Requirements: 1. Prepare the amortization table. 2. Provide all the necessary journal entries.At the beginning of 2018, VHF Industries acquired a machine with a fair value of $6,074,700 by issuing a fouryear, noninterest-bearing note in the face amount of $8 million. The note is payable in four annual installmentsof $2 million at the end of each year.Required:1. What is the effective rate of interest implicit in the agreement?2. Prepare the journal entry to record the purchase of the machine.3. Prepare the journal entry to record the first installment payment at December 31, 2018.4. Prepare the journal entry to record the second installment payment at December 31, 2019.5. Suppose the market value of the machine was unknown at the time of purchase, but the market rate of interestfor notes of similar risk was 11%. Prepare the journal entry to record the purchase of the machine.On January 1, 2021, Palalay Bus Co. received a 4-year, noninterest bearing note of P1,000,000 in exchange for land with carrying amount of P400,000. The note is due on December 31, 2024. The effective interest rate is 12%. The present value of 1 at 12% for 4 periods is 0.6355.Requirements: 1. Prepare the amortization table. 2. Provide all the necessary journal entries.
- PREPARE AN AMORTIZATION TABLE AND FIND HOW MUCH IS THE NET PROCEEDS FOR THE FOLLOWING CASES: Case 2: On January 1, 2020 Square company purchase a property by issuing 15% promissory note with face amount of 5,000,000 to yield 12% interest and principal payable annually for 5 years.1. Action Company acquired an investment property with an installment price of P2,500,000. The acquisition of the property requires a down payment of 20% and a non-interest bearing note payable at the end of each year for five years. The prevailing rate of interest for similar instrument is 12%. The present value of an annuity of 12% for four periods is 3.605. Action Company incurred transaction costs amounting to P45,000 for the property. What is the cost of acquiring the property?A company purchases machinery for kshs 800,000 by making a down payment of Shs 150,000 and the remainder to be paid in equal instalments of kshs 150,000 for six years. Calculate the effective rate of interest
- On January 1, 2020, South Company purchased five delivery trucks for P 10,000,000 from West Company.South Company gave West Company 1 year non-interest bearing note (stated interest/nominal interest rate is 0) payable on January 1, 2021. At the date of purchase, the interest rate for this type of purchase is 13%. Round present value factors to four decimal places. Prepare an amortization table. Required: What is the value of the Delivery Truck that shall be reflected in the statement of financial position on January 1, 2020? ______________________ What is the amount of Notes Payable that shall be reflected in the statement of financial position on January 1, 2020?______________2. Bob's Excavating purchased some equipment by issuing a three-year 6% note for $8,000 when the market rate for an obligation of this nature was 8%. The interest is payable annually. Actuarial information for three periods follows: 6% 8% 0.839619 0.793832 Present value of 1 2.673012 2.577097 Present value of annuity of 1 At the date of purchase, what amount should be debited to Equipment? a. $8,000.00 b. $7,587.66 c. $6,716.96 d. $6,350.66At the beginnig of current year, East Company leased a new machine from North Company with the following information: Annual rental payable at beginning of each lease year 4000,000Lease Term 10 yearsUseful life of machine 12 yearsImplicit interest rate 14% Present value of an annuity of 1 in advance for 10 periods at 14% 5.95Present value of 1 for 10 periods at 14% 0.27 East company had the option to purchase the machine upon the expirtation of the lease term by paying P500,000. The purchase option is reasoably certain to be exercised. What amount should East Company…