Homework Answers
| 1) | ||||
| Computation Of Value of Note Receivables | ||||
| a | Annual Interest Amount | 400 | ||
| ($10000*4%) | ||||
| b | PV Annuity Factor for (5 Years,8%) | 3.992710037 | ||
| c | Present Value Of Annual Interest (a*b) | 1597.084015 | ||
| d | Redemption Value | 10000 | ||
| e | PV Factor Of (5 Years,8%) | 0.680583197 | ||
| g | Present Value Of Redemption Amount (d*e) | 6805.83197 | ||
| f | Intrinsic Value ( Price ) Of The Bond (c+g) | 8402.915985 | ||
| Discount on issue of note = 10000-8403 | ||||
| =$1597 | ||||
| The journal entry would be | ||||
| Date | Account Title | Debit | Credit | |
| Note Receivables | $ 10,000 | |||
| Discount On Note Receivables | $ 1,597 | |||
| Service Revenue | $ 8,403 | |||
| Correct Option : b. Credit to discount on note receivables $1597 | ||||
| 2) | Computation Of Note Receivable Value | |||
| a | Annual Interest Amount | $ 600 | ||
| ($10000*6%) | ||||
| b | PV Annuity Factor for (5 Years,10%) | 3.790786769 | ||
| c | Present Value Of Annual Interest (a*b) | $ 2,274 | ||
| d | Redemption Value | $ 10,000 | ||
| e | PV Factor Of (5 Years,10%) | 0.620921323 | ||
| g | Present Value Of Redemption Amount (d*e) | $ 6,209 | ||
| f | Intrinsic Value ( Price ) Of The Bond (c+g) | $ 8,483.69 | ||
| Year | Opening Balance | Interest | Cash Received | Closing Balance | |
| 0 | $ 8,484 | ||||
| 1 | $ 8,484 | $ 848 | $ 600 | $ 8,732 | |
| 2 | $ 8,732 | $ 873 | $ 600 | $ 9,005 | |
| 3 | $ 9,005 | $ 901 | $ 600 | $ 9,306 | |
| 4 | $ 9,306 | $ 931 | $ 600 | $ 9,637 | |
| 5 | $ 9,637 | $ 964 | $ 600 | $ 10,000 | |
| Total | $ 4,516 | ||||
| Correct Option: c.4516 | |||||
Please upvote.
Add Answer to:
The ABC Company rendered services on 1/1/15 and accepted a $10,000, 4%, 5-year note receivable with...
On December 31, 2019, Coronado Company finished consulting services and accepted in exchange a promissory note...
On December 31, 2019, Coronado Company finished consulting services and accepted in exchange a promissory note with a face value of $610,000, a due date of December 31, 2022, and a stated rate of 6%, with interest receivable at the end of each year. The fair value of the services is not readily determinable and the note is not readily marketable. Under the circumstances, the note is considered to have an appropriate imputed rate of interest of 12%. The following...
O'Martin & Lowry, Inc. accepted a $150,000,8%, 90-day note receivable for services rendered to a client....
O'Martin & Lowry, Inc. accepted a $150,000,8%, 90-day note receivable for services rendered to a client. Thirty days later, O'Martin & Lowry discounted the note at a bank at 10%. Assume interest has not been recognized for the first month. (Info for #23 and #24) 23. The entry to record the proceeds from the sale of the note would include a a. debit to Notes Receivable for $150,000 b. debit to Cash for $145,000. c. credit to Interest Receivable for...
The following selected transactions are from Gonzalez Company. Year 1 Dec. 16 Accepted a $15, 600,...
The following selected transactions are from Gonzalez Company. Year 1 Dec. 16 Accepted a $15, 600, 60-day, 10% note in granting Lindsey Martin a time extension on his past-due account receivable. 31 Made an adjusting entry to record the accrued interest on the Martin note. Year 2 Feb. 14 Received Martin's payment of principal and interest on the note dated December 16. Mar. 2 Accepted a $10,000, 10%, 90-day note in granting a time extension on the past-due account receivable...
On December 31, 2020, Kingbird Inc. rendered services to Beghun Corporation at an agreed price of...
On December 31, 2020, Kingbird Inc. rendered services to Beghun Corporation at an agreed price of $118,390, accepting $45,800 down and agreeing to accept the balance in four equal installments of $22,900 receivable each December 31. An assumed interest rate of 10% is imputed. Prepare an amortization schedule. Assume that the effective-interest method is used for amortization purposes. (Round answers to 0 decimal places, e.g. 5,275.) December 31, 2020 Schedule of Note Discount Amortization Interest Discount Revenue Amortized Cash Received...
On December 31, 2017, BLANK Inc. rendered services to BLANK Corporation at an agreed price of...
On December 31, 2017, BLANK Inc. rendered services to BLANK
Corporation at an agreed price of $109,448, accepting $42,900 down
and agreeing to accept the balance in four equal installments of
$21,450 receivable each December 31. An assumed interest rate of
11% is imputed.
Prepare an amortization schedule. Assume that the
effective-interest method is used for amortization purposes.
December 31, 2017
Schedule of Note Discount Amortization
Date
Cash
Received
Interest
Revenue
Carrying
Amount of Note
12/31/17
$
$
$
12/31/18...
Note Receivable Problem #3 On January 1, 2020, ABC sold merchandise for to a customer and...
Note Receivable Problem #3 On January 1, 2020, ABC sold merchandise for to a customer and agreed a $100,000 note receivable paid in four equal annual installments, each due on December 31. Note has no (zero) stated rate and an imputed interest rate of 8%. a. Determine the issue price of the note receivable. b. Provide the journal entry to record the bond issue? C. Determine the amount of interest revenue that Sparky will recognize over the life of the...
14. On August 1, Kim Company accepted a 90-day note receivable as payment for services provided...
14. On August 1, Kim Company accepted a 90-day note receivable as payment for services provided to Usu Company. The terms of the note were $20,000 face value and 6% interest. On October 30, the journal entry to record the collection of the note should include a a. credit to Interest Revenue for $300 b. debit to Notes Receivable for $20,000 c. credit to Notes Receivable for $20,300 d. debit to Interest Receivable for $300 The objectives of intenal control...
McCormick Corporation issued a 4-year, $40,000, 5% note to Greenbush Company on January 1, 2020, and...
McCormick Corporation issued a 4-year, $40,000, 5% note to
Greenbush Company on January 1, 2020, and received a computer that
normally sells for $31,495. The note requires annual interest
payments each December 31. The market rate of interest for a note
of similar risk is 12%.
Prepare McCormick’s journal entries for (a) the January 1 issuance
and (b) the December 31 interest. (Round answers to 0
decimal places, e.g. 38,548. If no entry is required, select "No
Entry" for the...
bosworth corporation accepted a 5-year note receivable from steelman company on january 1 year 1. the...
bosworth corporation accepted a 5-year note receivable from steelman company on january 1 year 1. the maturity value of the note is 780000. the note has a stated interest rate of 10%. however, the prevailing market interest rate is 12% abd the note is recorded at 722591. the note requires interest payments on june 30 and december 31. what will be the note balance at december 31 year 1
Company A issues a four-year, $10,000, zero-interest-bearing note to Company B. The implicit rate that equated...
Company A issues a four-year, $10,000, zero-interest-bearing
note to Company B. The implicit rate that equated the total cash to
be paid ($10,000 at maturity) to the present value of the future
cash flows ($7,350.30 cash proceeds at date of issuance) is 8%.
Please fill in all the required blanks in the following table.
(Round numbers to 2 decimal places, e.g. $588.02.)
ABC company issues the following bonds: Issue date – January 1, 2020 Maturity date – January 1, 2024...
O'Martin & Lowry, Inc. accepted a $150,000,8%, 90-day note receivable for services rendered to a client. Thirty days later, O'Martin & Lowry discounted the note at a bank at 10%. Assume interest has not been recognized for the first month. (Info for #23 and #24) 23. The entry to record the proceeds from the sale of the note would include a a. debit to Notes Receivable for $150,000 b. debit to Cash for $145,000. c. credit to Interest Receivable for...
The following selected transactions are from Gonzalez Company. Year 1 Dec. 16 Accepted a $15, 600, 60-day, 10% note in granting Lindsey Martin a time extension on his past-due account receivable. 31 Made an adjusting entry to record the accrued interest on the Martin note. Year 2 Feb. 14 Received Martin's payment of principal and interest on the note dated December 16. Mar. 2 Accepted a $10,000, 10%, 90-day note in granting a time extension on the past-due account receivable...
On December 31, 2020, Kingbird Inc. rendered services to Beghun Corporation at an agreed price of $118,390, accepting $45,800 down and agreeing to accept the balance in four equal installments of $22,900 receivable each December 31. An assumed interest rate of 10% is imputed. Prepare an amortization schedule. Assume that the effective-interest method is used for amortization purposes. (Round answers to 0 decimal places, e.g. 5,275.) December 31, 2020 Schedule of Note Discount Amortization Interest Discount Revenue Amortized Cash Received...
On December 31, 2017, BLANK Inc. rendered services to BLANK
Corporation at an agreed price of $109,448, accepting $42,900 down
and agreeing to accept the balance in four equal installments of
$21,450 receivable each December 31. An assumed interest rate of
11% is imputed.
Prepare an amortization schedule. Assume that the
effective-interest method is used for amortization purposes.
December 31, 2017
Schedule of Note Discount Amortization
Date
Cash
Received
Interest
Revenue
Carrying
Amount of Note
12/31/17
$
$
$
12/31/18...
Note Receivable Problem #3 On January 1, 2020, ABC sold merchandise for to a customer and agreed a $100,000 note receivable paid in four equal annual installments, each due on December 31. Note has no (zero) stated rate and an imputed interest rate of 8%. a. Determine the issue price of the note receivable. b. Provide the journal entry to record the bond issue? C. Determine the amount of interest revenue that Sparky will recognize over the life of the...
14. On August 1, Kim Company accepted a 90-day note receivable as payment for services provided to Usu Company. The terms of the note were $20,000 face value and 6% interest. On October 30, the journal entry to record the collection of the note should include a a. credit to Interest Revenue for $300 b. debit to Notes Receivable for $20,000 c. credit to Notes Receivable for $20,300 d. debit to Interest Receivable for $300 The objectives of intenal control...
McCormick Corporation issued a 4-year, $40,000, 5% note to
Greenbush Company on January 1, 2020, and received a computer that
normally sells for $31,495. The note requires annual interest
payments each December 31. The market rate of interest for a note
of similar risk is 12%.
Prepare McCormick’s journal entries for (a) the January 1 issuance
and (b) the December 31 interest. (Round answers to 0
decimal places, e.g. 38,548. If no entry is required, select "No
Entry" for the...
Company A issues a four-year, $10,000, zero-interest-bearing
note to Company B. The implicit rate that equated the total cash to
be paid ($10,000 at maturity) to the present value of the future
cash flows ($7,350.30 cash proceeds at date of issuance) is 8%.
Please fill in all the required blanks in the following table.
(Round numbers to 2 decimal places, e.g. $588.02.)
ABC company issues the following bonds: Issue date – January 1, 2020 Maturity date – January 1, 2024...
Most questions answered within 3 hours.
-
) Assume that in the market for widgets, demand is highly
elastic compared to supply. If...
asked 8 minutes ago -
Why is a personal interview the most important step in the sales
selection process? What are...
asked 18 minutes ago -
In Python rOverlap (x1, y1, w1, h1, x2, y2, w2, h2) A rectangle
is axis-aligned if...
asked 18 minutes ago -
If we observe in a protein solution that DNA is causing a
mixture 260/280 ratio ~0.9,...
asked 28 minutes ago -
Explain the steps involved in making cDNA from mRNA, and how you
would create a cDNA...
asked 29 minutes ago -
A beta (β) particle is described by which of the following?
Select the correct answer below:...
asked 31 minutes ago -
A new machine costs $150,000, lasts 10 years, has an annual
O&M cost of $50,000, and...
asked 35 minutes ago -
A newspaper in a large Midwestern city reported that the
National Association of Realtors said that...
asked 36 minutes ago -
1. Develop a use case diagram for the bank case study described
in Chapter 1. 2....
asked 46 minutes ago -
The phylum Protista has often been referred to as a junk drawer
of classification. Explain what...
asked 53 minutes ago -
The average amount of money spent for lunch per person in the
college cafeteria is $7.09...
asked 55 minutes ago -
You follow the lab procedure and at the end of Part 4C, you used
an average...
asked 1 hour ago