Pronghorn Corporation purchases a patent from Larkspur Inc. on July 1, 2017, for $267,000. The patent has a remaining legal life of 9years. Pronghorn estimates the patent will have a useful life of 4 years, based on expected product innovations in the market.Prepare Pronghorn's journal entries to record the purchase of the patent and 2017 amortization. (Credit account titles are automaticallyindented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for theamounts.)Account Titles and ExplanationDebitCreditPatentsCash(To record purchase of patents)Amortization ExpensePatents(To record amortization of patents)2670006675026700066750

The patent is amortized over the 4 years, which is the useful life, instead of the legal life.

Answered: Pronghorn Corporation purchases a…

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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Vinubhai
Megamind Inc. purchases equipment for $250000. They pay $50,000 cash and the supplier finances the remainder with a note. Terms are 2 years, no installment payments, full amount paid at the end of the 2 years, interest rate of 2%. Megamind’s interest rate for debt of a similar risk profile is 5%. Record the entries required for 2022 and 2023. The equipment was purchased on January 1, 2022. Show all steps. Use Date, Cash, Interest, Difference, and PV as headings for Amortization Schedule. Show and explain the difference between Net method and Gross Method.
Moon Ltd. sells custom made furniture on 24 months' interest free terms to qualifying customers. On 30 June 2023, Moon Ltd. sells $71,600 of furniture to Jessie Ltd., which cost $40,300, payable by 30 June 2025. By 30 June 2024, only 40% of the ordered furniture was delivered. The appropriate interest rate for this transaction is determined to be 11.20% per annum. Moon Ltd. uses perpetual system. By 30 June 2025, all payment was made, and the remaining furniture was delivered. Required: Question 4 Calculate the present value of the $71,600 to be received on 30 June 2025.
Amber Mining and Milling, Inc., contracted with Truax Corporation to have constructed a custom-made lathe. The machine was completed and ready for use on January 1, 2021. Amber paid for the lathe by issuing a $600,000, threeyear note that specified 4% interest, payable annually on December 31 of each year. The cash market price of the lathe was unknown. It was determined by comparison with similar transactions that 12% was a reasonable rate of interest.Required:1. Prepare the journal entry on January 1, 2021, for Amber Mining and Milling’s purchase of the lathe.2. Prepare an amortization schedule for the three-year term of the note.3. Prepare the journal entries to record (a) interest for each of the three years and (b) payment of the note at maturity.
Amber Mining and Milling, Incorporated, contracted with Truax Corporation to have constructed a custom-made lathe. The machine was completed and ready for use on January 1, 2024. Amber paid for the lathe by issuing a $700,000, three-year note that specified 4% interest, payable annually on December 31 of each year. The cash market price of the lathe was unknown. It was determined by comparison with similar transactions that 12% was a reasonable rate of interest. Required: 1-a. Complete the table below to determine the price of the equipment. 1-b. Prepare the journal entry on January 1, 2024, for Truax Corporation’s sale of the lathe. Assume Truax spent $500,000 to construct the lathe. 2. Prepare an amortization schedule for the three-year term of the note. 3. Prepare the journal entries to record (a) interest for each of the three years and (b) payment of the note at maturity for Truax. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1,…
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Metro Company, a dealer in machinery and equipment, leased equipment to Sands, Inc., on July 1, 2015. The lease is appropriately accounted for as a sales-type lease by Metro and as a capital lease by Sands. The lease is for a 8-year period (the useful life of the asset) expiring June 30, 2023. The first of 8 equal annual payments of $552,000 was made on July 1, 2015. Metro had purchased the equipment for $3,500,000 on January 1, 2015, and established a list selling price of $4,800,000 on the equipment. Assume that the present value at July 1, 2015, of the rent payments over the lease term discounted at 6% (the appropriate interest rate) was $4,000,000. 43. Assuming that Sands, Inc. uses straight-line depreciation, what is the amount of depreciation and interest expense that Sands should record for the year ended December 31, 2015? a. $400,000 and $206,880 b. $250,000 and $103,440 c. $250,000 and $206,880 d. $240,000 and $103,440 44. What is the amount of profit on the sale and the…
Hemingway Company purchases equipment by issuing a 7-year, $210,000 non-interest-bearing note, when the market rate for this type of note is 7%. Hemingway will pay off the note with equal payments to be made at the end of each year. Required: Prepare the journal entry to record Hemingway’s acquisition of the equipment.
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Sheridan Electronics issues a $376,500, 3%, 10-year mortgage note on December 31, 2021. The proceeds from the note are to be used in financing a new research laboratory. The terms of the note provide for annual installment payments, exclusive of real estate taxes and insurance, of $44,137. Payments are due on December 31. Prepare the entries for (1) the loan and (2) the first installment payment.
Jay
American Food Services, Incorporated, acquired a packaging machine from Barton and Barton Corporation. . Barton and Barton completed construction of the machine on January 1, 2024. In payment for the $4.9 million machine, American Food Services Issued a four-year Installment note to be paid in four equal payments at the end of each year. • The payments Include Interest at the rate of 12%. Required: 1. Prepare the journal entry for American Food Services purchase of the machine on January 1, 2024. 2. Prepare an amortization schedule for the four-year term of the installment note. 3. Prepare the journal entry for the first installment payment on December 31, 2024. 4. Prepare the Journal entry for the third Installment payment on December 31, 2026. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1. FVA of $1. PVA of $1. FVAD of $1 and PVAD of $1) · Complete this question by entering your answers in the tabs below. Req 2 Req 1 3 and 4 Prepare an amortization schedule…

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