Pharoah Inc. owes Waterway Bank $166,000 plus $16,300 of accrued interest. The debt is a 10-year, 10% note. During 2023, Pharoah's business declined due to a slowing regional economy. On December 31, 2023, the bank agrees to accept an old machine and cancel the entire debt. The machine has a cost of $302,000, accumulated depreciation of $185,000, and a fair value of $146,000. The bank plans to dispose of the machine at a cost of $6,000. Both Pharoah and Waterway Bank prepare financial statements in accordance with IFRS 9. (a) Prepare the journal entries for Pharpah and Waterway Bank to record this debt settlement. Assume Waterway Bank had previously recognized an allowance for doubtful accounts for the impairment prior to the settlement. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Date Dec. 31, 2023 Account Titles and Explanation Pharoah Inc. Debit Credit

Pharoah Inc. owes Waterway Bank $166,000 plus $16,300 of accrued interest. The debt is a 10-year, 10% note. During 2023, Pharoah's business declined due to a slowing regional economy. On December 31, 2023, the bank agrees to accept an old machine and cancel the entire debt. The machine has a cost of $302,000, accumulated depreciation of $185,000, and a fair value of $146,000. The bank plans to dispose of the machine at a cost of $6,000. Both Pharoah and Waterway Bank prepare financial statements in accordance with IFRS 9. (a) Prepare the journal entries for Pharpah and Waterway Bank to record this debt settlement. Assume Waterway Bank had previously recognized an allowance for doubtful accounts for the impairment prior to the settlement. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Date Dec. 31, 2023 Account Titles and Explanation Pharoah Inc. Debit Credit

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

On December 31, 2025, Nash Company signed a $1,035,300 note to Crane Bank. The market interest rate at that time was 11%. The stated interest rate on the note was 9%, payable annually. The note matures in 5 years. Unfortunately, because of lower sales, Nash's financial situation worsened. On December 31, 2027, Crane Bank determined that it was probable that the company would pay back only $621,180 of the principal at maturity. However, it was considered likely that interest would continue to be paid, based on the $1,035,300 loan. (a) Your answer is incorrect. Determine the amount of cash Nash received from the loan on December 31, 2025. (Round present value factors to 5 decimal places, e.g. 0.52513 and final answer to O decimal places, e.g. 5,275.) Amount of cash Nash received from the loan $ Prepare a note amortization schedule for Crane Bank up to December 31, 2022. (Round answers to O decimal places, eg. 5,275) Note Amortization Schedule (Before Impairment) Cash Received 128430…
On July 1, 2021, LIBAGO Company sold a machine costing P500,000 with accumulated depreciation of P380,000 on the date of sale. LIBAGO received as consideration for the sale, a P300,000 non-interest bearing note, due July 1, 2024. There was no established exchange price for the equipment and the note had no ready market. The prevailing rate of interest for a note of this type at July 1, 2021 was 12% and 13% on December 31, 2021. 37. In relation to this transaction, the total income to be recognized in LIBAGO’s 2021 profit or loss is:
On January 1, 2021, Mumbleford & Sons Co. sold equipment to Mulligan Care Service in exchange for a zero-interest bearing note. The note has a face value of $110,000, with payment due in 12 months. The imputed interest rate is 10%. The fair value of the equipment on the date of sale was $100,000. The amount of revenue to be recognized on this transaction in 2021 is Select one: a. $110,000 sales revenue. b. $100,000 sales revenue. c. $100,000 sales revenue and $10,000 deferred revenue. d. $100,000 sales revenue and $10,000 interest revenue.
On January 1,2021, Mickey Mouse Corp sells a Furniture and Fixtures costing P1,200,000 and with accumulated depreciation of P550,000 as of January 1,2021. The company receives 5-year, P500,000, 12% note. The stated interest in unrealistic since the prevailing rate of interest for a note of this type is 14%. How much is the interest income to be recognized in December 31, 2022? 65,196 65,923 66,753 67,698
On January 1, 2020, Coleman Auto sold a Tracktor to Southern Energy in exchange for a 5-year zero-interest-bearing note with a face amount of $135,000, due January 1, 2025. Coleman’s credit rating makes it eligible to borrow money at 3% interest. Southern Energy’s credit rating makes it eligible to borrow money at 5% interest compounded annually from local banks. Coleman’s inventory records show the truck’s original cost at $80,000. Instructions: Record all business transactions for 2020 related to the Sale and Coleman’s accounting records, assuming Colemans has a December 31, 2020 year-end.
At January 1, 2024, Mahmoud Industries, Incorporated, owed Second BancCorp $15 million under a 10% note due December 31, 2026. Interest was paid last on December 31, 2022. Mahmoud was experiencing severe financial difficulties and asked Second BancCorp to modify the terms of the debt agreement. After negotiation Second BancCorp agreed to: a. Forgive the interest for 2023 and 2024. b. Reduce the remaining two years' interest payments to $1 million each and delay the first payment until December 31, 2025. c. Reduce the unpaid principal amount to $14 million. Required: Prepare the journal entries by Mahmoud Industries, Incorporated, necessitated by the restructuring of the debt at (1) January 1, 2024; (2) December 31, 2025; and (3) December 31, 2026. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.
On January 1, 2021, Bonita Industries sold property to Sandhill Company. There was no established exchange price for the property, and Sandhill gave Bonita a $4500000 zero-interest-bearing note payable in 5 equal annual installments of $900000, with the first payment due December 31, 2021. The prevailing rate of interest for a note of this type is 9%. The present value of the note at 9% was $3500730 at January 1, 2021. What should be the balance of the Discount on Notes Payable account on the books of Sandhill at December 31, 2021 after adjusting entries are made, assuming that the effective-interest method is used? $713252. $684204. $999270. $0.
Bonita Company owes $167,000 plus $14,900 of accrued interest to Windsor State Bank. The debt is a 10-year, 10% note. During 2020, Bonita's business deteriorated due to a faltering regional economy. On December 31, 2020, Windsor State Bank agrees to accept an old machine and cancel the entire debt. The machine has a cost of $322,000, accumulated depreciation of $177,100, and a fair value of $149,000. (a) Prepare journal entries for Bonita Company and Windsor State Bank to record this debt settlement. (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 amount is entered. Do not indent manually.) Date December 31, 2020 Account Titles and Explanation Bonita Company (Debtor): Notes Payable Interest Payable Debit 167,000 14,900 Credit
On December 31 , 2018 Nicholas Co. is in financial difficulty and cannot pay a note due that day . It is a $3,300,000 8% issued at par note, payable to Key Bank. Key Bank agrees to accept from Nicholas equipment that has a fair value of 1,450,000, originally costing $2,400,000, with accumulated depreciation of $1,250,000. Key Bank also extends the maturity date to December 31, 2021, reduces the face amount of the note to $1,250,000, and reduces the interest rate to 6%, with interest payable at the end of each year. a. Nicholas should recognize a gain or loss on the transfer of the equipment of: b. At the end of each of the next three years Nicholas records the $ 75,000 interest paid to Key Bank as a: c. In determining the carrying value of the note at December 31, 2018 Key Bank uses an effective interest rate equal to: d. Key Bank records a loss on restructuring of: e. In recording the loss on restructuring, Key bank:
Danica Corporation sold one of its buildings on January 1, 2007 for P20,000,000. Danica received a cash down payment of P5,000,000 and a 5-year, 10% note for the balance of P15,000,000. The note is payable in equal annual payments of principal and interest of P3,957,000 payable on December 31 of each year until the year 2011. What amount is to be reported as current notes receivable on December 31, 2008? A. 2,457,000 B. 2,702,700 C. 2,972,970 D. 3,000,000
am. 09.
On January 1, 2020, Kingbird Corporation sold a building that cost $257,510 and that had accumulated depreciation of $102,150 on the date of sale. Kingbird received as consideration a $247,510 non-interest-bearing note due on January 1, 2023. There was no established exchange price for the building, and the note had no ready market. The prevailing rate of interest for a note of this type on January 1, 2020, was 11%. At what amount should the gain from the sale of the building be reported?