Question

On January 1, 2020, Bramble Corporation sold a building that cost $274.380 and that had accumulated depreciation of $105,010 on the date of sale. Bramble received as consideration a $264,380 non-interest-bearing note due on January 1, 2023. There was no established exchange price for the building, and the note had na ready market. The prevailing rate of interest for a note of this type on January 1, 2020 was 12%. At what amount should the gain from the sale of the building be reported? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, eg. 158,581.) The amount of gain should be reported $ eTextbook and Media On January 1, 2020, Bramble Corporation purchased 312 of the $1,000 face value, 12%, 10-year bonds of Walters Inc. The bonds mature an January 1, 2030, and pay interest annually beginning January 1, 2021. Bramble purchased the bonds to yield 11%. How much did Bramble pay for the bonds? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to decimal places, e.g.458,581.) Bramble must pay for the bonds $ eTextbook and Media Bramble Corporation bought a new machine and agreed to pay for it in equal annual installments of $5.810 at the end of each of the next 10 years. Assuming that a prevailing interest rate of 8X applies to this contract, how much should Bramble record as the cost of the machine? (Round factor values to 5 decimal places, eg. 1.25124 and final answer to O decimal places, e.g. 458,581.) Cost of the machine to be recorded $ eTextbook and Media Bramble Corporation purchased a special tractor on December 31, 2020. The purchase agreement stipulated that Bramble should pay $21.330 at the time of purchase and $5,060 at the end of each of the next 8 years. The tractor should be recorded on December 31, 2020, at what amount, assurning an appropriate interest rate of 12%? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.) Cost of tractor to he recorded $ eTextbook and Media Bramble Corporation wants to withdraw $109,910 (including principal) from an investment fund at the end of each year for 9 years. What should be the required initial investment at the beginning of the first year if the fund earns 11%? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to O decimal places, eg.458,581.) Required initial investment $

Answer 1

Required 1:
The amount of gain should reported   $ 18,810
Explanation :
Particular	Amount($)
Present value of note payable due in 3 years (see note 1 )	$ 188,180
less: Book value of buildings ($ 274,380-$105,010 )	($169,370)
Gain on sale of building	$ 18,810
Journal entry :
General journal	Debit	Credit
Note receivable	$ 264,380
Accumulated depreciation	$ 105,010
Building		$ 274,380
Discount on note{(264380+105010)-(274380+18810)}		$ 76,200
Gain on sale of building		$ 18,810
( To record sale of building )
Note 1:
Present value of note payable rate = 12% , n= 3 years is 0.71178
($ 264,380 * 0.71178 ) = $ 188,180 ( rounded )

Required 2 :
Bramble must pay for the bonds = $ 330,373
Explanation :
Face value of bonds ( 312 bonds * $ 1000 per bond ) = $ 312,000
Annual interest on bonds = $ 312,000 * 12 % = $ 37,440
Particular	Amount($)
Present value of $1 on face value of bonds ( see note 2 )	$ 109,880
Present value of annuity on annual interest ( see note 3 )	$ 220,493
Bramble must pay for the bonds	$ 330,373
Note 2 :
Present value of $1 on face value of bonds   ,rate 11% n = 10 years is 0.35218
($ 312,000 * 0.35218 ) = $ 109,880
Note 3:
Present value of annuity on annual interest , rate = 11 % , N= 10 years is 5.88923
($37,440 *5.88923 ) = $ 220,493 ( rounded)

Required 3 :
Cost of machine to be recorded = $ 38,986
Explanation :
Cost of machine = 5,810 * $ 6.71008 = $ 38,986 ( rounded )
Present value of annuity , rate = 8 % , n= 10 years is 6.71008
Journal entry :
General journal	Debit	Credit
New machine	$ 38,986
Discount on note ($58,010 -$ 38,986 )	$ 19,114
Note payable ($5,810 *10 payments )		$ 58,100
( To record purchase of new machine )

Required 4 :
Cost of tractor to be recorded = $ 46,466
Explanation :
Particular	Amount($)
Payment at the time of purchase	$ 21,330
Add: present value of annuity on payment at year ended (see note 4)	$ 25,136
Cost of tractor to be recorded	$ 46,466
Note 4 :
Present value of annuity rate = 12 % , N= 8 years is 4.96764
($ 5,060 * 4.96764 )= $ 25,136

Required 5 :

Required initial investment = $ 608,577

Explanation :

Initial investment = $ 109,910 * 5.53705 = $ 608,577 (rounded )

Present value of annuity , rate = 11 % , n= 9 years is 5.53705