Homework Answers
1. Sales revenue = Present value of note = $3000*0.7350 = $2205
2. Interest revenue = $3000-2205 = $795
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Determining Sales and Interest Revenue using Long-term Note Receivable A four-year, $3,000, noninterest-bearing note was received...
Analyzing Interest-Bearing and Noninterest-Bearing Notes Consider the following three separate scenarios for a one-year, $300,000 note...
Analyzing Interest-Bearing and Noninterest-Bearing Notes Consider the following three separate scenarios for a one-year, $300,000 note payable issued on September 1, 2020. Complete the table, using the straight-line method to amortize any discount on note payable. Note: Round your answers to the nearest whole dollar. $300,000 Note payable $300,000 Note payable 12% Interest due at maturity 10% interest due at maturity 12% market rate 10% market rate Borrower's FYE*: Dec. 31 Borrower's FYE: Nov. 30 $300,000 Note payable Noninterest-bearing 12%...
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Preparing Entries and Interest Schedule for Long-Term Note Receivable; Effective Interest Method On April 1, 2020, Mountain Company sold merchandise and received a $19,200, three-year, noninterest-bearing note. The market rate is 6%. Mountain Company has a March 31 year-end. The company uses the effective interest method to amortize any discount. Required Prepare all entries for Mountain Company over the note's term, including year-end adjustments. Note: Round amounts to the nearest whole dollar. Note: If multiple credits are required, list accounts...
Preparing Entries and Interest Schedule for Long-Term Note Receivable; Effective Interest Method On April 1, 2020,...
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Preparing Entries and Interest Schedule for Long-Term Note Receivable: Effective Interest Method On April 1, 2020,...
Preparing Entries and Interest Schedule for Long-Term Note Receivable: Effective Interest Method On April 1, 2020, Mountain Company sold merchandise and received a $33,600, three-year, noninterest-bearing note. The market rate is 10% Mountain Company has a March 31 year end. The company uses the effective interest method to amortize any discount Required Prepare all entries for Mountain Company over the note's term, including year-end adjustments. Note: Round amounts to the nearest whole dollar. Note: If multiple credits are required, list...
Drebin Security Systems sold merchandise to a customer in exchange for a $50,000, five-year, noninterest-bearing note...
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7.61/ At the beginning of 2013, Gannon Company received a three-year zero-interest-bearing $1,000...
7.61/ At the beginning of 2013, Gannon Company received a three-year zero-interest-bearing $1,000 trade note. The market rate for equivalent notes was 8% at that time. Gannon reported this note as a $1,000 trade note receivable on its 2013 year-end statement of financial position and $1,000 as sales revenue for 2013. What effect did this accounting for the note have on Gannon's net earnings for 2013, 2014, 2015, and its retained earnings at the end of 2015, respectively? And explain...
Interest Revenue Cypress O Company's December 31, 2021, balance sheet listed $1.074,000 of notes receivable and...
Interest Revenue
Cypress O Company's December 31, 2021, balance sheet listed $1.074,000 of notes receivable and $24,600 of interest receivable included in current assets. The following notes make up the notes receivable balance Note 1 Dated B/31/2021, principal of $450, see and interest at 12% due on 2/28/2022. Note 2 Dated 6/30/2021, principal of $330,000 and interest due 3/31/2022. Note ) $100,eee face value noninterest-bearing note dated 9/30/2021, due 3/31/2022. Note was issued in exchange for merchandise The company records...
Cambria Limited took a $400,000 two-year note receivable from a customer in connection with a major...
Cambria Limited took a $400,000 two-year note receivable from a customer in connection with a major inventory sale transaction on 1 January 20X5. The note required annual end-of-year interest payments of 4%, and the principal was due at the end of 20X6. (PV of $1. PVA of S1, and PVAD of S1) (Use appropriate factor(s) from the tables provided.) Required: 1. Prepare journal entries to record the initial sale transaction and each payment on the books of Cambria, assuming that...
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Sheffield Inc. had the following long-term receivable account balances at December 31, 2019. Note receivable from sale of division $2,400,000 Note receivable from officer 495,100 Transactions during 2020 and other information relating to Sheffield’s long-term receivables were as follows. 1. The $2,400,000 note receivable is dated May 1, 2019, bears interest at 10%, and represents the balance of the consideration received from the sale of Sheffield’s electronics division to New York Company. Principal payments of $800,000 plus appropriate interest are...
When an equipment dealer receives a long term note in exchange for equipment, and the stated...
When an equipment dealer receives a long term note in exchange for equipment, and the stated rate of interest is indicative of the market rate of interest at the time of the transaction, the present value of the future cash flows received on the notes: Multiple Choice Is treated as a current liability at the exchange date O () is recorded as interest revenue at the exchange date is recorded as interest receivable at the exchange date. O O O...
Analyzing Interest-Bearing and Noninterest-Bearing Notes Consider the following three separate scenarios for a one-year, $300,000 note payable issued on September 1, 2020. Complete the table, using the straight-line method to amortize any discount on note payable. Note: Round your answers to the nearest whole dollar. $300,000 Note payable $300,000 Note payable 12% Interest due at maturity 10% interest due at maturity 12% market rate 10% market rate Borrower's FYE*: Dec. 31 Borrower's FYE: Nov. 30 $300,000 Note payable Noninterest-bearing 12%...
Preparing Entries and Interest Schedule for Long-Term Note Receivable; Effective Interest Method On April 1, 2020, Mountain Company sold merchandise and received a $19,200, three-year, noninterest-bearing note. The market rate is 6%. Mountain Company has a March 31 year-end. The company uses the effective interest method to amortize any discount. Required Prepare all entries for Mountain Company over the note's term, including year-end adjustments. Note: Round amounts to the nearest whole dollar. Note: If multiple credits are required, list accounts...
Preparing Entries and Interest Schedule for Long-Term Note Receivable; Effective Interest Method On April 1, 2020, Mountain Company sold merchandise and received a $21,600, three-year, noninterest-bearing note. The market rate is 8%. Mountain Company has a March 31 year-end. The company uses the effective interest method to amortize any discount. Required Prepare all entries for Mountain Company over the note's term, including year-end adjustments. Note: Round amounts to the nearest whole dollar. Note: If multiple credits are required, list accounts...
Preparing Entries and Interest Schedule for Long-Term Note Receivable: Effective Interest Method On April 1, 2020, Mountain Company sold merchandise and received a $33,600, three-year, noninterest-bearing note. The market rate is 10% Mountain Company has a March 31 year end. The company uses the effective interest method to amortize any discount Required Prepare all entries for Mountain Company over the note's term, including year-end adjustments. Note: Round amounts to the nearest whole dollar. Note: If multiple credits are required, list...
Interest Revenue
Cypress O Company's December 31, 2021, balance sheet listed $1.074,000 of notes receivable and $24,600 of interest receivable included in current assets. The following notes make up the notes receivable balance Note 1 Dated B/31/2021, principal of $450, see and interest at 12% due on 2/28/2022. Note 2 Dated 6/30/2021, principal of $330,000 and interest due 3/31/2022. Note ) $100,eee face value noninterest-bearing note dated 9/30/2021, due 3/31/2022. Note was issued in exchange for merchandise The company records...
Cambria Limited took a $400,000 two-year note receivable from a customer in connection with a major inventory sale transaction on 1 January 20X5. The note required annual end-of-year interest payments of 4%, and the principal was due at the end of 20X6. (PV of $1. PVA of S1, and PVAD of S1) (Use appropriate factor(s) from the tables provided.) Required: 1. Prepare journal entries to record the initial sale transaction and each payment on the books of Cambria, assuming that...
When an equipment dealer receives a long term note in exchange for equipment, and the stated rate of interest is indicative of the market rate of interest at the time of the transaction, the present value of the future cash flows received on the notes: Multiple Choice Is treated as a current liability at the exchange date O () is recorded as interest revenue at the exchange date is recorded as interest receivable at the exchange date. O O O...
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