On January 1, 2018, Vaughn Manufacturing sold property to Cullumber Company. There was no established exchange...
On January 1, 2018, Vaughn Manufacturing sold property to
Cullumber Company. There was no established exchange price for the
property, and Cullumber gave Vaughn a $6300000
zero-interest-bearing note payable in 5 equal annual installments
of $1260000, with the first payment due December 31, 2018. The
prevailing rate of interest for a note of this type is 9%. The
present value of the note at 9% was $4901022 at January 1, 2018.
What should be the balance of the Discount on Notes Payable account
on the books of Cullumber at December 31, 2018 after adjusting
entries are made, assuming that the effective-interest method is
used?
| $957886. |
| $1398978. |
| $998553. |
| $0. |
Homework Answers
Solution:
Interest expense on 31.12.2018 = $4,901,022 * 9% = $441,092
Balance in discount on notes payable on 31.12.2018 = ($6,300,000 - $4,901,022 - $441,092) = $957,886
Hence first option is correct.
Add Answer to:
On January 1, 2018, Vaughn Manufacturing sold property to
Cullumber Company. There was no established exchange...
10. On January 1, 2018, Sunland Company sold property to Blossom Company. There was no established...
10. On January 1, 2018, Sunland Company sold property to Blossom Company. There was no established exchange price for the property, and Blossom gave Sunland a S4700000 zero-interest- bearing note payable in 5 equal annual installments of $940000, with the first payment due December 31, 2018. The prevailing rate of interest for a note of this type is 9%. The present value of the note at 990 was $3656318 at January 1, 2018. What should be the balance of the...
On January 1, 2017, Crown Company sold property to Leary Company. There was no established exchange...
On January 1, 2017, Crown Company sold property to Leary Company. There was no established exchange price for the property, and Leary gave Crown a $400,000 zero-interest-bearing note payable, promising 5 equal annual installments of $80,000, with the first payment due December 31, 2017. The prevailing rate of interest for a note of this type is 8%. What is the carrying value of the notes payable at 12/31/17, after the first payment is made (assuming that the effective-interest method is...
Answer was wrong. Please provide the correct answer with a brief explanation. NEED TO BE ANSWERED...
Answer was wrong. Please provide the correct answer with a brief
explanation. NEED TO BE ANSWERED TODAY.
) On January 1, 2016, Bertram Co. sold property to King Company. There was no established exchange price for the property, and King gave Bertram a $3,000,000, zero-interest bearing note payable in 5 equal annual installments of $600,000, with the first payment due December 31, 2016. The prevailing rate of interest for a note of this type is 9%. The present value of...
On January 1, 2017, Vaughn Company makes the two following acquisitions. 1. Purchases land having a...
On January 1, 2017, Vaughn Company makes the two following acquisitions. 1. Purchases land having a fair value of $290,000 by issuing a 4-year, zero-interest-bearing promissory note in the face amount of $440,240. 2. Purchases equipment by issuing a 6%, 8-year promissory note having a maturity value of $430,000 (interest payable annually on January 1). The company has to pay 11% interest for funds from its bank. (a) Record the two journal entries that should be recorded by Vaughn Company...
On January 1, 2018, Wright Transport sold four school buses toElmira School District. In exchange...
On January 1, 2018, Wright Transport sold four school buses to
Elmira School District. In exchange for the buses, Wright received
a note requiring payment of $518,000 by Elmira on December 31,
2020. The effective interest rate is 9%. (FV of $1, PV of $1, FVA
of $1, PVA of $1, FVAD of $1, and PVAD of $1) (Use the appropriate
factor(s) from the tables):Required:1. How much sales revenue would Wright recognize on January 1,
2018, for this transaction?2. Prepare...
At January 1, 2018, Cullumber Limited reported the following property, plant, and equipment accounts: Accumulated dep...
At January 1, 2018, Cullumber Limited reported the following
property, plant, and equipment accounts:
Accumulated depreciation—buildings
$62,300,000
Accumulated depreciation—equipment
50,300,000
Buildings
96,100,000
Equipment
150,300,000
Land
18,100,000
The company uses straight-line depreciation for buildings and
equipment, its year end is December 31, and it makes adjusting
entries annually. The buildings are estimated to have a 40-year
useful life and no residual value; the equipment is estimated to
have a 10-year useful life and no residual value.
During 2018, the following selected...
Problem 13-1 Bank loan; accrued interest L013-2] Blanton Plastics, a household plastic product manufacturer, borrowed $8...
Problem 13-1 Bank loan; accrued interest L013-2] Blanton Plastics, a household plastic product manufacturer, borrowed $8 million cash on October 1, 2018, to provide working capital f year-end production. Blanton issued a four-month, 6% promissory note to L&T Bank under a prearranged short-term line of credit. Interest on the note was payable at maturity. Each firm's fiscal period is the calendar year. Required 1. Prepare the journal entries to record (a) the issuance of the note by Blanton Plastics and...
On December 31, 2015, Vaughn Manufacturing is in financial difficulty and cannot pay a note due...
On December 31, 2015, Vaughn Manufacturing is in financial difficulty and cannot pay a note due that day. It is a $2900000 note with $290000 accrued interest payable to Cullumber, Inc. Cullumber agrees to accept from Vaughn equipment that has a fair value of $1440000, an original cost of $2410000, and accumulated depreciation of $1150000. Cullumber also forgives the accrued interest, extends the maturity date to December 31, 2018, reduces the face amount of the note to $1250000, and reduces...
10. On January 1, 2018, Wright Transport sold four school buses to the Elmira School District....
10. On January 1, 2018, Wright Transport sold four school buses to the Elmira School District. In exchange for the buses, Wright received a note requiring payment of $524,000 by Elmira on December 31, 2020. The effective interest rate is 9%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.): Required: 1. How much sales revenue would Wright recognize on January 1, 2018,...
On January 1, 2019, Worthylake Company sold used machinery to Brown Company, accepting a $25,000, non-interest-bearing...
On January 1, 2019, Worthylake Company sold used machinery to
Brown Company, accepting a $25,000, non-interest-bearing note
maturing on January 1, 2021. Worthylake carried the machinery on
its books at a cost of $21,000 and a current book value of $16,000.
Neither the fair value of the machinery nor the note was
determinable at the time of sale; however, Brown’s incremental
borrowing rate was 10%.
Required:
Prepare the journal entries on Worthylake’s books to
record:
1.
sale of the machinery...
10. On January 1, 2018, Sunland Company sold property to Blossom Company. There was no established exchange price for the property, and Blossom gave Sunland a S4700000 zero-interest- bearing note payable in 5 equal annual installments of $940000, with the first payment due December 31, 2018. The prevailing rate of interest for a note of this type is 9%. The present value of the note at 990 was $3656318 at January 1, 2018. What should be the balance of the...
Answer was wrong. Please provide the correct answer with a brief
explanation. NEED TO BE ANSWERED TODAY.
) On January 1, 2016, Bertram Co. sold property to King Company. There was no established exchange price for the property, and King gave Bertram a $3,000,000, zero-interest bearing note payable in 5 equal annual installments of $600,000, with the first payment due December 31, 2016. The prevailing rate of interest for a note of this type is 9%. The present value of...
On January 1, 2017, Vaughn Company makes the two following acquisitions. 1. Purchases land having a fair value of $290,000 by issuing a 4-year, zero-interest-bearing promissory note in the face amount of $440,240. 2. Purchases equipment by issuing a 6%, 8-year promissory note having a maturity value of $430,000 (interest payable annually on January 1). The company has to pay 11% interest for funds from its bank. (a) Record the two journal entries that should be recorded by Vaughn Company...
On January 1, 2018, Wright Transport sold four school buses to
Elmira School District. In exchange for the buses, Wright received
a note requiring payment of $518,000 by Elmira on December 31,
2020. The effective interest rate is 9%. (FV of $1, PV of $1, FVA
of $1, PVA of $1, FVAD of $1, and PVAD of $1) (Use the appropriate
factor(s) from the tables):Required:1. How much sales revenue would Wright recognize on January 1,
2018, for this transaction?2. Prepare...
At January 1, 2018, Cullumber Limited reported the following
property, plant, and equipment accounts:
Accumulated depreciation—buildings
$62,300,000
Accumulated depreciation—equipment
50,300,000
Buildings
96,100,000
Equipment
150,300,000
Land
18,100,000
The company uses straight-line depreciation for buildings and
equipment, its year end is December 31, and it makes adjusting
entries annually. The buildings are estimated to have a 40-year
useful life and no residual value; the equipment is estimated to
have a 10-year useful life and no residual value.
During 2018, the following selected...
Problem 13-1 Bank loan; accrued interest L013-2] Blanton Plastics, a household plastic product manufacturer, borrowed $8 million cash on October 1, 2018, to provide working capital f year-end production. Blanton issued a four-month, 6% promissory note to L&T Bank under a prearranged short-term line of credit. Interest on the note was payable at maturity. Each firm's fiscal period is the calendar year. Required 1. Prepare the journal entries to record (a) the issuance of the note by Blanton Plastics and...
On December 31, 2015, Vaughn Manufacturing is in financial difficulty and cannot pay a note due that day. It is a $2900000 note with $290000 accrued interest payable to Cullumber, Inc. Cullumber agrees to accept from Vaughn equipment that has a fair value of $1440000, an original cost of $2410000, and accumulated depreciation of $1150000. Cullumber also forgives the accrued interest, extends the maturity date to December 31, 2018, reduces the face amount of the note to $1250000, and reduces...
On January 1, 2019, Worthylake Company sold used machinery to
Brown Company, accepting a $25,000, non-interest-bearing note
maturing on January 1, 2021. Worthylake carried the machinery on
its books at a cost of $21,000 and a current book value of $16,000.
Neither the fair value of the machinery nor the note was
determinable at the time of sale; however, Brown’s incremental
borrowing rate was 10%.
Required:
Prepare the journal entries on Worthylake’s books to
record:
1.
sale of the machinery...
Most questions answered within 3 hours.
-
Describe how to distinguish true motility from brownian motion
and fluid flow when viewing a wet...
asked 18 seconds ago -
A manufacturer of game controllers is concerned that its
controller may be difficult for left-handed users....
asked 2 minutes ago -
Water at gauge pressure of 3.8 atmospheres at street level
enters an office building at 0.60...
asked 16 minutes ago -
Quick question, I want to know how to convert decimal numbers to
binary number, when i...
asked 37 minutes ago -
You found out that now you are going to receive payments of
$8,500 for the next...
asked 41 minutes ago -
17.
Technician A says that leaking components are usually repaired
rather than replaced. Technician B says...
asked 41 minutes ago -
A) An Operon is:?
1- A gene that affect another gene
transcription.
2. A gene coding...
asked 48 minutes ago -
When opening a file, use this method to determine whether a file
exists before you attempt...
asked 52 minutes ago -
Sales total $300,000 when variable costs total $180,000 and
fixed costs are $60,000. Breakeven sales total:...
asked 59 minutes ago -
1)
To calculate the depth of a water well, an explorer drops a stone and with...
asked 56 minutes ago -
0.429-g sample of gas occupies 125 mL at 60. cm of Hg and 25°C.
The molar...
asked 58 minutes ago -
The
pH of a 0.90M solution of boric acid (H3BO3) is measured to be
4.64.
Calculate...
asked 1 hour ago