(b) | On January 1, 2017, Field Furniture Co. borrowed $5,000,000 (face value) from Gary Sinise Co., a major customer, through a zero-interest-bearing note due in 4 years. Because the note was zero-interest-bearing, Field Furniture agreed to sell furniture to this customer at lower than market price. A 10% rate of interest is normally charged on this type of loan. Prepare the journal entry to record this transaction and determine the amount of interest expense to report for 2017. |
(b) On January 1, 2017, Field Furniture Co. borrowed $5,000,000 (face value) from Gary Sinise Co.,...
E14-17 (L03) (Imputation of Interest) Presented below are two independent situations. (a) On January 1, 2017, Robin Wright Inc. purchased land that had an assessed value of $350,000 at the time of purchase. A $550,000, zero-interest-bearing note due January 1, 2020, was given in exchange. There was no established exchange price for the land, nor a ready fair value for the note. The interest rate charged on a note of this type is 12%. Determine at what amount the land...
(Imputation of Interest) Presented below are two independent situations. (a) On January 1, 2017, Robin Wright Inc. purchased land that had an assessed value of $350,000 at the time of purchase. A $550,000, zero-interest-bearing note due January 1, 2020, was given in exchange. There was no established exchange price for the land, nor a ready fair value for the note. The interest rate charged on a note of this type is 12%. Determine at what amount the land should be...
Presented below are two independent situations: (a) On January 1,2017, Stellar Inc. purchased land that had an assessed value of $ 322,000 at the time of purchase. A $517,000, zero-interest-bearing note due January 1,2020, was given in exchange. There was no established exchange price for the land, nor a ready fair value for the note. The interest rate charged on a note of this type is 12%. Determine at what amount the land should be recorded at January 1,2017, and...
(a) On January 1, 2020, Metlock Inc. purchased land that had an assessed value of $316,000 at the time of purchase. A $518,000, zero-interest-bearing note due January 1, 2023, was given in exchange. There was no established exchange price for the land, nor a ready fair value for the note. The interest rate charged on a note of this type is 12%. Determine at what amount the land should be recorded at January 1, 2020, and the interest expense to...
Presented below are two independent situations: (a) On January 1, 2020, Swifty Inc. purchased land that had an assessed value of $365,000 at the time of purchase. A $571,000, zero-interest-bearing note due January 1, 2023, was given in exchange. There was no established exchange price for the land, nor a ready fair value for the note. The interest rate charged on a note of this type is 12%. Determine at what amount the land should be recorded at January 1,...
Presented below are two independent situations: (a) On January 1, 2020, Pina Inc. purchased land that had an assessed value of $373,000 at the time of purchase. A $530,000, zero-interest-bearing note due January 1, 2023, was given in exchange. There was no established exchange price for the land, nor a ready fair value for the note. The interest rate charged on a note of this type is 12%. Determine at what amount the land should be recorded at January 1,...
PLEASE SHOW ALL WORK!
THANK YOU.
(a) On January 1, 2020, Sunland Inc. purchased land that had an assessed value of $380,000 at the time of purchase. A $515,000, zero-interest-bearing note due January 1, 2023, was given in exchange. There was no established exchange price for the land, nor a ready fair value for the note. The interest rate charged on a note of this type is 12%. Determine at what amount the land should be recorded at January 1,...
Exercise 14-17
Presented below are two independent situations:
(a) On January 1, 2020, Riverbed Inc. purchased
land that had an assessed value of $329,000 at the time of
purchase. A $501,000, zero-interest-bearing note due January 1,
2023, was given in exchange. There was no established exchange
price for the land, nor a ready fair value for the note. The
interest rate charged on a note of this type is 12%.
Determine at what amount the land should be recorded at...
E14-18 (L03) (Imputation of Interest with Right) On January 1, 2017, Margaret Avery Co. borrowed and received $400,000 from a major customer evidenced by a zero-interest-bearing note due in 3 years. As consideration for the zero-interest-bearing feature, Avery agrees to supply the customer’s inventory needs for the loan period at lower than the market price. The appropriate rate at which to impute interest is 8%. Instructions . (a) Prepare the journal entry to record the initial transaction on January 1,...
On January 1, 2017, Stellar Co. borrowed and received $517,000 from a major customer evidenced by a zero-interest-bearing note due in 4 years. As consideration for the zero-interest-bearing feature, Stellar agrees to supply the customer’s inventory needs for the loan period at lower than the market price. The appropriate rate at which to impute interest is 8%. (a) Prepare the journal entry to record the initial transaction on January 1, 2017. (b) Prepare the journal entry to record any adjusting...