On January 2, 2009, Easy Pay Co. sold aplant to Menchie Co. for P1,500,000. On thatdate, the plant's carrying amount wasP1,000,000. Menchie gave Easy PayP300,000 cash and a P1,200,000 note,payable in four annual installments ofP300,000 plus 12% interest. Menchie madethe first principal and interest payment ofP444,000 on December 31, 2009. Easy Payuses the installment method of revenuerecognition. In its 2009 income statement,what amount of realized gross profit shouldEasy Pay report?

Sales Price of Plant=P1,500,000 Cost or carrying value=P1,000,000 Gross Profit=P500,000 Sales…

Answered: On January 2, 2009, Easy Pay Co. sold a…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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For the next two items: A company sold a factory on January 1, 2016 for P7,000,000. The entity received a cash down payment of P1,000,000 and a 4-year, 12%note for the balance. The note is payable in equal annual payments of principal and interest of P1,975,400 payable on December 31 of each year until 2019. 20. What is the interest income for 2017? a. 840,000 b. 720,000 c. 569,352 d. 975,400 21. What is the carrying amount of the note receivable on December 31, 2017? a. 4,500,000 b. 4,744,600 c. 3,338,552 d. 4,025,600 E D1 c00 000
On February 1, 20x1, TSR Co. sold machinery with historical cost of P3,000,000 and accumulated depreciation of P900,000 in exchange for a 3-year, P2,100,000 noninterest-bearing note receivable due in equal semi-annual payments every August 1 and February 1 starting on August 1, 20x1. The prevailing rate of interest for this type of note is 10%. How much is the interest income in 20x2?
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 2, 2017, Criswell Acres purchased from Mifflinburg Farm Supply a new tractor that had a cash selling price of $109,837. As payment, Criswell gave Mifflinburg Farm Supply $25,000 in cash and a $100,000, five-year note that provided for annual interest payments at 6%. At the time of the sale, the interest rate normally charged to farms with Criswell's credit rating is 10%. Required: 1. Prepare Mufflinburg Farm Supply's journal entry to record the sale. 2. Prepare the journal entry to record the first interest payment Mifflinburg Farm Supply received on December 31, 2017. 3. Determine the note receivable balance that Mifflinburg Farm Supply will report on December 31, 2018. 4. Determine Mifflinburg Farm Supply's note receivable balance on December 31, 2018, assuming that the company reports notes receivable at fair value and the relevant rate of interest at that time has fallen to 8%. Assume that the December 31, 2018, interest payment has been made.
On December 31, 2025, Cullumber Company acquired a computer from Plato Corporation by issuing a $614,000.00 zero-interest- bearing note, payable in full on December 31, 2029. Cullumber Company's credit rating permits it to borrow funds from its several lines of credit at 10%. The computer is expected to have a 5-year life and a $76,000 salvage value. Click here to view factor tables. (a) Prepare the journal entry for the purchase on December 31, 2025. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answers to 2 decimal places, eg. 58,971.23. 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.) Date Account Titles and Explanation December 31,2025 eTextbook and Media List of Accounts Debit Credit
Harper Co. funds the acquisition of equipment on January 1, year 8 by issuing a $15,000 non-interest-bearing note payable. Beginning on December 31, year 8, the debt will be paid off in ten equal yearly payments. The market rate of interest for this sort of note is 5%. Given the facts below, how much should Harper Co. report the equipment on its December 31, year 8 balance sheet? For ten periods, the present value of $1 at 5% is 0.61391. The present value of a $1 regular annuity at 5% for ten periods is 7.72173. The current value of a $1 annuity payable in ten periods at 5% is 8.10782 8.10782
16. On January 1, 2012, the Dolce Corporation issued a three-year, non-interest bearing note with face value of P3,000,000 for a piece of land purchased from Jardine Corporation. The note is payable in annual installments of P1,000,000 every December 31, starting on December 31, 2012. The land has an equivalent cash price of P2,400,000, a price that provides the note an effective interest rate of 12%. What is the interest expense for the year ending December 31, 2012? * a. P360,000 b. P288,000 c. P240,000 d. P168,000
On January 2, 20X1, Criswell Acres purchased from Mifflinburg Farm Supply a new tractor that had a cash selling price of $109,837. As payment, Criswell gave Mifflinburg Farm Supply $25,000 in cash and a $100,000, five-year note that provided for annual interest payments at 6%. At the time of the sale, the interest rate normally charged to farms with Criswell's credit rating is 10%. Use the following links to the present value tables to calculate answers. (PV of 1, PVAD of 1, and PVOA of 1) (Use the appropriate factor(s) from the tables provided.) Required: 1. Prepare Mifflinburg Farm Supply's journal entry to record the sale. 2. Prepare the journal entry to record the first interest payment Mifflinburg Farm Supply received on December 31, 20X1. 3. Determine the note receivable balance that Mifflinburg Farm Supply will report on December 31, 20X2. 4. Determine Mifflinburg Farm Supply's note receivable balance on December 31, 2OX2, assuming that the company reports notes receivable at…
LCD Industries purchased a supply of electronic components from Entel Corporation on November 1, 2021. In payment for the $25.2 million purchase, LCD issued a 1-year installment note to be paid in equal monthly payments at the end of each month. The payments include interest at the rate of 18%.(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. & 2. Prepare the journal entries for LCD’s purchase of the components on November 1, 2021 and the first installment payment on November 30, 2021.3. What is the amount of interest expense that LCD will report in its income statement for the year ended December 31, 2021?

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