Concept explainers
(a)
Introduction:
Compound interest considers the time value of money. Present value of Cashflow means the amount that should be invested to earn a specific amount on a specific date.
To prepare:
(b)
Introduction:
Compound interest considers the time value of money. Present value of Cashflow means the amount that should be invested to earn a specific amount on a specific date.
To calculate:
The present value of investment.
(c)
Introduction:
Compound interest considers the time value of money. Present value of Cashflow means the amount that should be invested to earn a specific amount on a specific date.
To record:
The
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Chapter A3 Solutions
Cornerstones of Financial Accounting
- please explain all the steps needed and how to solve thank you.Answer in textarrow_forwardPlease give a detailed solution On January 1, 2020, TPM Inc. acquires a piece of equipment for a list price of $300,000. It pays$20,000 immediately and writes a note for the remainder. Annual interest of 3% is due everyDecember 31st, and the principal of the note is payable in 6 years.TPM’s incremental borrowing rate is 6%, while the seller’s incremental borrowing rate is 7%.TPM is a public company. It depreciates its equipment using the diminishing balance method at15%. The equipment’s residual value is $40,000 at the end of its useful life. 1) Prepare all required journal entries for the years 2020 and 2021.2) Determine the Asset’s net book value on January 1, 2024.3) Determine the note payable carrying value on January 1, 2024arrow_forwardPickle Company issues a six-year, 8% mortgage note on January 1, 2020, to obtain financing for new equipment. The terms provide for semi-annual instalment payments of $112,825. Required: 1) What were the cash proceeds received from the issue of the note? You can use the PV Table located in your textbook, a financial calculator or Excel function to solve this question.arrow_forward
- 1. On January 1, 2023, Malone purchased a building with a $200,000 10 year zero interest note. The normal borrowing rate for Malone is 10%. (you will need to use TVM and an amortization table) A. Compute the present value and prepare an amortization table. B. Record the necessary journal entries at 1/1/23, 12/31/23 and 12/31/24 using the effective interest method. C. Show the financial statement presentation of the note on the I/S and B/S at 12/31/23 and 12/31/24. 2. On October 1, 2023, Malone borrowed $50,000 by issuing a 11 month, 9% note. Interest will be paid at maturity. (you do NOT need to use TVM or an amortization table) A. Record the journal entries at 10/1/23, 12/31/23 and maturity. B. Show the financial statement presentation of the note on the I/S and B/S at 12/31/23 and 12/31/24. 3. During 2023 Jones sells products that carry a three-year manufacturer’s warranty. Jones sold 2,000 units this year for $2,000 each. For this year’s sales, Jones estimates the warranty costs to…arrow_forwardOn May 1, 2020, HELLO Company purchased five delivery trucks for P 10,000,000 from HI Company. HELLO Company gave HI Company 1 year 12%interest bearing note (stated interest/nominal interest rate is 12%) payable on May 1, 2021. At the date of purchase, the interest rate for this type of purchase is 18%. Round your present value factors to four decimal places. Show solutions. Box your final answers for Number 2 questions. Prepare an amortization table. Required: Give the journal entries on May 1, 2020, December 31, 2020 and May 1, 2021. Answer the following: What is the value of the Delivery Truck that shall be reflected in the statement of financial position on May 1, 2020? ______________________ What is the amount of Notes Payable that shall be reflected in the statement of financial position on May 1, 2020?______________ What is the amount of Notes Payable that shall be reflected in the statement of financial position on December 31, 2020?______________ What is the interest expense…arrow_forwardProvide a step by step and full solution.arrow_forward
- Problem 6: Carmen Corporation uses the installment sales method. On January 1, 2020, The corporation sold an equipment for P2,000,000 with the following terms: 30% down payment on the date of sale and the balance is payable in four equal annual installments every December 31. The cost of the equipment is P1,200,000. Ignore the concept of time value of money. Requirement: Provide the journal entries for 2020 and 2021. Show all computations in good form.arrow_forwardSubject:arrow_forwardSubject: acountingarrow_forward
- Loan Amortization Schedule Required: a) Construct an full amortization schedule for the scenerio below. Details to include pmt #, payment amount, interest portion and principal portion. b) Determine how much interest was paid over the term of the loan. Details: Kirkland Corporation obtained a $125,000 loan for a new business venture. The loan contract requires payments at the end of each quarter including interest at 3% compounded semi-annually. The loan is to be repaid by equal quarterly payments over a six year term. compounding I/Y NOM P/Y C/Y C/Y EFF PV рaуment FV NOM PMT C/Y EFF Pmt # Payment Interest Portion Principal Portion Principal Balancearrow_forwardsarrow_forwardAwesome Bank granted a loan to a borrower on January 1, 2020. The interest rate on the loan is 10% payable annually starting December 31, 2020. The loan matures in five years on December 31, 2024. Principal amount 4,000,000 Direct origination cost 61,500 Origination fee received from the borrower 350,000 The effective rate on the loan after considering the direct origination cost and origination fee received is 12%. Required: 1. Compute the carrying amount of the loan receivable on January 1, 2020. 2. Prepare a table of amortization for the loan receivable. 3. Prepare the journal entries for 2020 and 2021.arrow_forward
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage LearningEBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENTIntermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
- Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax CollegeFinancial Reporting, Financial Statement Analysis...FinanceISBN:9781285190907Author:James M. Wahlen, Stephen P. Baginski, Mark BradshawPublisher:Cengage LearningPrinciples of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College