Larkspur Incorporated purchased metal to build a new roller coaster on December 31, 2020. Larkspur provided...
Larkspur Incorporated purchased metal to build a new roller coaster on December 31, 2020. Larkspur provided a $800,000 down payment and agreed to pay the balance in equal instalments of $280,000 every December 31 for five years. Larkspur could have received a loan from the bank for this amount at 9% interest. Larkspur prepares financial statements in accordance with IFRS.
1.
| Amount used to record the note payable |
2. Prepare an instalment note repayment schedule for the term of the note.
3. Prepare the journal entries that would be recorded for the purchase and for the payments and interest on December 31, 2020, 2021, 2022, 2023, 2024, and 2025
Homework Answers
1)Present value of annual installment =PVA9%,5 * Annual installment
= 3.88965 *280000
= $ 1089102
**Find present value annuity due factor from table at 9% for 5 periods or using the formula [1/(1+i) + 1/(1+i)2 +1/(1+i)^3+ 1/(1+i) 4 +1/(1+i)^5]
2)
| SCHEDULE OF REPAYMENT OF NOTE PAYABLE | |||
| Date | Interest expense | principal repayment | Carrying value of note |
| December 31 2020 | 1089102 | ||
| 2021 | 1089102*9%= 98019.18 | 280000-98019.18= 181980.82 | 1089102-181980.82= 907121.18 |
| 2022 | 907121.18*9%= 81640.91 | 280000-81640.91= 198359.09 | 907121.18-198359.09= 708762.09 |
| 2023 | 708762.09*9%= 63788.59= | 280000-63788.59= 216211.41 | 708762.09-216211.41=492550.68 |
| 2024 | 492550.68*9%= 44329.56 | 280000-44329.56= 235670.44 | 492550.68-235670.44= 256880.24 |
| 2025 | 256880.24*9%= 23119.76 | 280000-23119.76= 256880.24 | 256880.24-256880.24 = 0 |
3)
| Date | Account title | Debit | credit |
| 31December 2020 | Machinery | 1889102 | |
| cash | 800000 | ||
| Note payable | 1089102 | ||
| 31December 2021 | Note payable | 181980.82 | |
| Interest expense | 98019.18 | ||
| cash | 280000 | ||
| 31December 2022 | Note payable | 198359.09 | |
| Interest expense | 81640.91 | ||
| cash | 280000 | ||
| 31December 2023 | Note payable | 216211.41 | |
| Interest expense | 63788.59 | ||
| cash | 280000 | ||
| 31December 2024 | Note payable | 235670.44 | |
| Interest expense | 44329.56 | ||
| cash | 280000 | ||
| 31December 2025 | Note payable | 256880.24 | |
| Interest expense | 23119.76 | ||
| cash | 280000 |
Add Answer to:
Larkspur Incorporated purchased metal to build a new roller
coaster on December 31, 2020. Larkspur provided...
P7.8 On December 31, 2020, Zhang Ltd. rendered services to Beggy Corp. at an agreed price...
P7.8 On December 31, 2020, Zhang Ltd. rendered services to Beggy Corp. at an agreed price of $91,844.10. In payment, Zhang accepted $36,000 cash and agreed to receive the balance in four equal instalments of $18,000 that are due each December 31. An interest rate of 11% is applicable. Instructions a. Calculate the value of the note receivable at December 31, 2020, and prepare an instalment note receivable schedule. b. Prepare the entries recorded by Zhang Ltd. for the sale...
At December 31, 2020, Sheffield Company has outstanding three long-term debt issues. The first is a...
At December 31, 2020, Sheffield Company has outstanding three long-term debt issues. The first is a $2,020,000 note payable which matures June 30, 2023. The second is a $7,060,000 bond issue which matures September 30, 2024. The third is a $14,840,000 sinking fund debenture with annual sinking fund payments of $2,968,000 in each of the years 2022 through 2026. Prepare the required note disclosure for the long-term debt at December 31, 2020. Long-term Debt 2021 $ 2022 $ 2023 $...
Accounting At December 31, 2020, Tamarisk Company has outstanding three long-term debt issues. The first is...
Accounting
At December 31, 2020, Tamarisk Company has outstanding three long-term debt issues. The first is a $1,960,000 note payable which matures June 30, 2023. The second is a $6,760,000 bond issue which matures September 30, 2024. The third is a $13,530,000 sinking fund debenture with annual sinking fund payments of $2,706,000 in each of the years 2022 through 2026. Prepare the required note disclosure for the long-term debt at December 31, 2020. Long-term Debt 2021 $ 2022 $ 2023...
Larkspur Inc. is building a new hockey arena at a cost of $3,050,000. It received a...
Larkspur Inc. is building a new hockey arena at a cost of $3,050,000. It received a down payment of $610,000 from local businesses to support the project, and now needs to borrow $2,440,000 to complete the project. It therefore decides to issue $2,440,000 of 10-year, 10.5% bonds. These bonds were issued on January 1, 2020, and pay interest annually on each January 1. The bonds yield 10% to the investor and have an effective interest rate to the issuer of...
Larkspur Inc. is building a new hockey arena at a cost of $1,900,000. It received a...
Larkspur Inc. is building a new hockey arena at a cost of $1,900,000. It received a down payment of $380,000 from local businesses to support the project, and now needs to borrow $1,520,000 to complete the project. It therefore decides to issue $1,520,000 of 10-year, 10.5% bonds. These bonds were issued on January 1, 2020, and pay interest annually on each January 1. The bonds yield 10% to the investor and have an effective interest rate to the issuer of...
On December 31, 2020, Green Bank enters into a debt restructuring agreement with Shamrock Inc., which...
On December 31, 2020, Green Bank enters into a debt restructuring agreement with Shamrock Inc., which is now experiencing financial trouble. The bank agrees to restructure a $2.3-million, 10% note receivable issued at par by the following modifications: 1. Reducing the principal obligation from $2.3 million to $2.19 million 2. Extending the maturity date from December 31, 2020, to December 31, 2023 3. Reducing the interest rate from 10% to 8% Shamrock pays interest at the end of each year....
I cannot figure out the answer Question 4 Windsor Incorporated owes $96,000 to Ontario Bank Inc....
I cannot figure out the answer
Question 4 Windsor Incorporated owes $96,000 to Ontario Bank Inc. on a two-year, 11% note due on December 31, 2020. The note was issued at par. Because Windsor is in financial trouble, Ontario Bank agrees to extend the maturity date of the note to December 31, 2022, reduce the principal to $72,000, and reduce the interest rate to 9%, payable annually on December 31. Present value of the new debt is calculated as $69,534....
Larkspur, Inc. issues a $510,000, 10%, 10-year mortgage note on December 31, 2022, to obtain financing...
Larkspur, Inc. issues a $510,000, 10%, 10-year mortgage note on December 31, 2022, to obtain financing for a new building. The terms provide for annual installment payments of $83,000. Prepare the entry to record the mortgage loan on December 31, 2022, and the first installment payment on December 31, 2023. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31, 2022 Dec. 31, 2023
Larkspur, Inc. issues a $510,000, 10%, 10-year mortgage note on December 31, 2022, to obtain financing...
Larkspur, Inc. issues a $510,000, 10%, 10-year mortgage note on December 31, 2022, to obtain financing for a new building. The terms provide for annual installment payments of $83,000. Prepare the entry to record the mortgage loan on December 31, 2022, and the first installment payment on December 31, 2023. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31, 2022 Dec. 31, 2023
Presented here are liability items for Larkspur Inc at December 31, 2022. Accounts payable Notes payable...
Presented here are liability items for Larkspur Inc at December 31, 2022. Accounts payable Notes payable (due May 1, 2023) Bonds payable (due 2026) Unearned rent revenue Discount on bonds payable $227.650 FICA taxes payable $11,310 29,000 Interest payable 58,000 1.305.000 Notes payable (due 2024) 116,000 348,000 Income taxes payable 5.075 59,450 Sales taxes payable 2,465 Prepare the liabilities section of Larkspur's balance sheet. LARKSPUR INC. Balance sheet (Partial)
At December 31, 2020, Sheffield Company has outstanding three long-term debt issues. The first is a $2,020,000 note payable which matures June 30, 2023. The second is a $7,060,000 bond issue which matures September 30, 2024. The third is a $14,840,000 sinking fund debenture with annual sinking fund payments of $2,968,000 in each of the years 2022 through 2026. Prepare the required note disclosure for the long-term debt at December 31, 2020. Long-term Debt 2021 $ 2022 $ 2023 $...
Accounting
At December 31, 2020, Tamarisk Company has outstanding three long-term debt issues. The first is a $1,960,000 note payable which matures June 30, 2023. The second is a $6,760,000 bond issue which matures September 30, 2024. The third is a $13,530,000 sinking fund debenture with annual sinking fund payments of $2,706,000 in each of the years 2022 through 2026. Prepare the required note disclosure for the long-term debt at December 31, 2020. Long-term Debt 2021 $ 2022 $ 2023...
On December 31, 2020, Green Bank enters into a debt restructuring agreement with Shamrock Inc., which is now experiencing financial trouble. The bank agrees to restructure a $2.3-million, 10% note receivable issued at par by the following modifications: 1. Reducing the principal obligation from $2.3 million to $2.19 million 2. Extending the maturity date from December 31, 2020, to December 31, 2023 3. Reducing the interest rate from 10% to 8% Shamrock pays interest at the end of each year....
I cannot figure out the answer
Question 4 Windsor Incorporated owes $96,000 to Ontario Bank Inc. on a two-year, 11% note due on December 31, 2020. The note was issued at par. Because Windsor is in financial trouble, Ontario Bank agrees to extend the maturity date of the note to December 31, 2022, reduce the principal to $72,000, and reduce the interest rate to 9%, payable annually on December 31. Present value of the new debt is calculated as $69,534....
Larkspur, Inc. issues a $510,000, 10%, 10-year mortgage note on December 31, 2022, to obtain financing for a new building. The terms provide for annual installment payments of $83,000. Prepare the entry to record the mortgage loan on December 31, 2022, and the first installment payment on December 31, 2023. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31, 2022 Dec. 31, 2023
Larkspur, Inc. issues a $510,000, 10%, 10-year mortgage note on December 31, 2022, to obtain financing for a new building. The terms provide for annual installment payments of $83,000. Prepare the entry to record the mortgage loan on December 31, 2022, and the first installment payment on December 31, 2023. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31, 2022 Dec. 31, 2023
Presented here are liability items for Larkspur Inc at December 31, 2022. Accounts payable Notes payable (due May 1, 2023) Bonds payable (due 2026) Unearned rent revenue Discount on bonds payable $227.650 FICA taxes payable $11,310 29,000 Interest payable 58,000 1.305.000 Notes payable (due 2024) 116,000 348,000 Income taxes payable 5.075 59,450 Sales taxes payable 2,465 Prepare the liabilities section of Larkspur's balance sheet. LARKSPUR INC. Balance sheet (Partial)
Most questions answered within 3 hours.
-
8. Which component of a file sharing client determines whether
the resource is local or remote?...
asked 2 minutes from now -
This assignment involves 2 Java programs 1) Write a Java program
to read a CSV (Comma...
asked 59 seconds from now -
A sample of nitrogen (N2) has a volume of 44.0 L at a pressure
of 755...
asked 2 minutes ago -
You have a new site that your company just purchased. When you
inspected the site, you...
asked 10 minutes ago -
Do you think that anyone requesting a sex change operation
should be entitled to receive one...
asked 17 minutes ago -
buffer chosen: phosphate, pH before addition of base 7.21 after
addition of base 8.87
1) What...
asked 15 minutes ago -
A firm is considering the purchase of a machine which would
represent an investment of $23...
asked 18 minutes ago -
Flower colour in a plant species is determined by two genes,
gene B and gene P....
asked 21 minutes ago -
findWordCrossIndex(horizontalWord, verticalWord) This function
finds and returns the index in the string "horizontalWord" of the
first...
asked 24 minutes ago -
evaluate the statements below and select those that correctly apply
to the role of PAMPs and...
asked 30 minutes ago -
Congratulations! You have just won the Lottery. The Lottery
Commission informs you that you can choose...
asked 36 minutes ago -
bulk flow (in respiration) moves blood from?
Air in and out of lungs?
air into lungs?...
asked 41 minutes ago