On May 31, 2022, Ace Tractor Company sold a tractor to Joker Excavating in exchange for a 2-year,$500,000, non-interest-bearing note. Joker Excavating will make a $300,000 payment on May 31,2023 and pay a lump-sum payment of 200,000 on May 31, 2024. Year end is December 31.Assume that your year-end adjusting entries are reversed. Do not show the reversal entry. If you donot know what a reversing journal entry is, it is important that you find out before completing thisquestion. Joker Excavating would normally pay an interest rate of 8%.RequiredPrepare all journal entries required for the note for the seller, Ace Tractor, from the initial sale torepayment. Count exact days for the year-end interest revenue adjustment. Calculate and journalizefinal amounts to the nearest dollar. Note that using the cash flow keys on your financial calculator isthe easiest way to calculate the present value of this note. (20 marks)

2022 Interest computation: $500,000.00 * 8% * 7/12(months) = $23,333.332023 Interest computation:…

Answered: On May 31, 2022, Ace Tractor Company…

Intermediate Accounting: Reporting And Analysis

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ISBN:9781337788281

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Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 10MC: On January 1, 2019, Park Company accepted a 36,000, non-interest-bearing, 3-year note from a major...

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Question

On May 31, 2022, Ace Tractor Company sold a tractor to Joker Excavating in exchange for a 2-year,
$500,000, non-interest-bearing note. Joker Excavating will make a $300,000 payment on May 31,
2023 and pay a lump-sum payment of 200,000 on May 31, 2024. Year end is December 31.
Assume that your year-end adjusting entries are reversed. Do not show the reversal entry. If you do
not know what a reversing journal entry is, it is important that you find out before completing this
question. Joker Excavating would normally pay an interest rate of 8%.
Required
Prepare all journal entries required for the note for the seller, Ace Tractor, from the initial sale to
repayment. Count exact days for the year-end interest revenue adjustment. Calculate and journalize
final amounts to the nearest dollar. Note that using the cash flow keys on your financial calculator is
the easiest way to calculate the present value of this note. (20 marks)

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