Value of Zero rated note due on 31.12.2019 | 470,000 |
Credit percentage for Crane | 6% |
Issue date of note | 31-Dec-17 |
Time period for maturity (years) | 2 |
Fair Value of the note | 418,298 |
Unamortised Expenses | 51,702 |
Expense for each year | 25,851 |
Interest income for Year 1 on 418,298 @ 6% | 25,098 |
Outstanding note at Year 1 end | 443,396 |
Interest income for Year 2 on 443,396 @ 6% | 26,604 |
Outstanding note at Year 2 end | 470,000 |
Journal | ||||
In the books of Crane | ||||
Date | Particulars | Dr/Cr. | Dr ($) | Cr ($) |
31-Dec-17 | Zero Interest bearing note | Dr | 418,298 | |
Unamortised Expense A/c | Dr | 51,702 | ||
To Sale of Equipment A/c | Cr | 470,000 | ||
(Being equipment sold against zero rated note, booked at fair value) | ||||
Date | Particulars | Dr/Cr. | Dr ($) | Cr ($) |
31-Dec-18 | Zero Interest bearing note | Dr | 25,098 | |
To Interest A/c | Cr | 25,098 | ||
(Being Interest @ 6% charged) | ||||
31-Dec-18 | Finance Cost A/c | Dr | 25,851 | |
To Unamortised Expense A/c | Cr | 25,851 | ||
(Being unamortised expense amortised for 1 year on straight line) | ||||
Date | Particulars | Dr/Cr. | Dr ($) | Cr ($) |
31-Dec-19 | Zero Interest bearing note | Dr | 26,604 | |
To Interest A/c | Cr | 26,604 | ||
(Being Interest @ 6% charged) | ||||
31-Dec-19 | Finance Cost A/c | Dr | 25,851 | |
To Unamortised Expense A/c | Cr | 25,851 | ||
(Being unamortised expense amortised for 1 year on straight line) | ||||
31-Dec-19 | Bank A/c | Dr | 470,000 | |
To Zero Interest bearing note | Cr | 470,000 | ||
(Being amount realized from Note) |
URCES reises 27-01 a 7-02 7-05 7-03 Practice Exercise 7-04 On December 31, 2017, Crane Co....
On December 31, 2020, Crane Company sells production equipment to Larkspur Inc. for $53,700. Crane includes a one-year assurance warranty service with the sale of all its equipment. The customer receives and pays for the equipment on December 31, 2020. Crane estimates the prices to be $49,800 for the equipment and $3,900 for the cost of warranty. Are the sale of the equipment and the warranty separate performance obligations within the contract? SHOW LIST OF ACCOUNTS LINK TO TEXT Prepare...
Brief Exercise 13-10 Teal Inc. is involved in a lawsuit at December 31, 2017. Prepare the December 31 entry assuming it is probable that Teal will be liable for $954,500 as a result of this suit. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit December 31, 2017 SHOW LIST...
Exercise 7-14 On December 31, 2015, Oriole Co. performed environmental consulting services for Hayduke Co. Hayduke was short of cash, and Oriole Co. agreed to accept a $346,500 zero-interest-bearing note due December 31, 2017, as payment in full. Hayduke is somewhat of a credit risk and typically borrows funds at a rate of 11%. Oriole is much more creditworthy and has various lines of credit at 6%. Prepare the journal entry to record the transaction of December 31, 2015, for...
Exercise 11-16 Presented below is information related to equipment owned by Cheyenne Company at December 31, 2017. Cost $10,800,000 Accumulated depreciation to date 1,200,000 Expected future net cash flows 8,400,000 Fair value 5,760,000 Assume that Cheyenne will continue to use this asset in the future. As of December 31, 2017, the equipment has a remaining useful life of 5 years. Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2017. (If no entry...
Exercise 9-08 On July 1, 2019, Crane Company purchased new equipment for $75,000. Its estimated useful life was 5 years with a 58,000 salvage value. On December 31, 2022, the company estimated that the equipment's remaining useful life was 10 years, with a revised salvage value of $5,000. Prepare the journal entry to record depreciation on December 31, 2019. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No...
Exercise 7-14 On December 31, 2015, Carla Co. performed environmental consulting services for Hayduke Co. Hayduke was short of cash, and Carla Co. agreed to accept a $340,000 zero-interest-bearing note due December 31, 2017, as payment in full. Hayduke is somewhat of a credit risk and typically borrows funds at a rate of 124 Carta is much more creditworthy and has various lines of credit at 6 Your answer is correct Prepare the journal entry to record the transaction of...
Exercise 11-16 Presented below is information related to equipment owned by Pearl Company at December 31, 2017. Cost $10,440,000 Accumulated depreciation to date 1,160,000 Expected future net cash flows 8,120,000 Fair value 5,568,000 Assume that Pearl will continue to use this asset in the future. As of December 31, 2017, the equipment has a remaining useful life of 5 years. Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2017. (If no entry...
Exercise 10-03 On June 1, Crane Company Ltd. borrows $99,000 from Acme Bank on a 6-month, $99,000, 8% note. The note matures on December 1. Prepare the entry on June 1. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Debit Credit Date Account Titles and Explanation June 1 SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO VIDEO Prepare the adjusting entry on June 30. (Credit account titles are automatically indented when amount is...
Exercise 7-14 On December 31, 2015, Carla Co performed environmental consulting services for Hayduke Co. Hayduke was short of cash and Carl C reed to a $340,000 monterest-bearing note de December 31, 2017, as payment in U Hayduke is somewhat of a credit risk and typically borrows funds at a rate of 12 Carla is much more creditworthy and has various lines of credit at 6%. Prepare the journal entry to record the transaction of December 31, 2015, for the...
Exercise 11-16 Presented below is information related to equipment owned by Oriole Company at December 31, 2017. $11,070,000 Cost Accumulated depreciation to date 1,230,000 Expected future net cash flows 8,610,000 Fair value 5,904,000 Assume that Oriole will continue to use this asset in the future. As of December 31, 2017, the equipment has a remaining useful life of 4 years. Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2017. (If no entry...