Question
In: Accounting
Blanchard Inc. acquired a packaging machine from CCC Corporation. CCC Corporation completed construction of the machine...
Blanchard Inc. acquired a packaging machine from CCC Corporation. CCC Corporation completed construction of the machine on January 1, 2020. In payment for the $5 million machine, Blanchard Inc. issued a three-year installment note to be paid in three equal payments at the end of each year. The payments include interest at the rate of 8%.
1. Prepare the journal entry for Blanchard’s purchase of the machine on January 1, 2020.
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January 1, 2020: |
||
2. Prepare the partial amortization schedule for the first two years of the 3-year installment note.
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Amount of loan |
|
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÷ Present value of an ordinary annuity (PVA) of $1 |
|
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Installment payment (rounded up to the nearest integer) |
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Date |
Cash |
Effective |
Decrease in Balance |
Outstanding |
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1/1/2020 |
||||
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12/31/2020 |
||||
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12/31/2021 |
||||
|
12/31/2022 |
Not required |
Not required |
Not required |
Not required |
3. Prepare the journal entry for the installment payments on December 31, 2020 and December 31, 2021.
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December 31, 2020: |
||
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December 31, 2021: |
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Solutions
ekkarill92 answered 3 months agoRelated Solutions
Blanchard Inc. acquired a packaging machine from CCC Corporation. CCC Corporation completed construction of the machine...
Blanchard Inc. acquired a packaging machine from CCC
Corporation. CCC Corporation completed construction of the machine
on January 1, 2020. In payment for the $4 million machine,
Blanchard Inc. issued a three-year installment note to be paid in
three equal payments at the end of each year. The payments include
interest at the rate of 6%.
1. Prepare the journal entry for Blanchard’s purchase of the
machine on January 1, 2020
January 1, 2020:
PVA(i=3%, n=3) = 2.82861, PVA(i=3%, n=6)...
Wilkins Food Products, Inc., acquired a packaging machine from Lawrence Specialists Corporation. Lawrence completed construction of...
Wilkins Food Products, Inc., acquired a packaging machine from
Lawrence Specialists Corporation. Lawrence completed construction
of the machine on January 1, 2019. In payment for the machine
Wilkins issued a three-year installment note to be paid in three
equal payments at the end of each year. The payments include
interest at the rate of 10%. Lawrence made a conceptual error in
preparing the amortization schedule, which Wilkins failed to
discover until 2021. The error had caused Wilkins to understate
interest...
Wilkins Food Products Inc. acquired a packaging machine from Lawrence Specialists Corporation. Lawrence completed construction of...
Wilkins Food Products Inc. acquired a packaging machine from
Lawrence Specialists Corporation. Lawrence completed construction
of the machine on January 1, 2019. In payment for the machine
Wilkins issued a three-year installment note to be paid in three
equal payments at the end of each year. The payments include
interest at the rate of 15%. Lawrence made a conceptual error in
preparing the amortization schedule, which Wilkins failed to
discover until 2021. As a result of the error, Wilkins understated...
American Food Services, Inc., acquired a packaging machine from Barton and Barton Corporation. Barton and Barton...
American Food Services, Inc., acquired a packaging machine from
Barton and Barton Corporation. Barton and Barton completed
construction of the machine on January 1, 2018. In payment for the
$5.0 million machine, American Food Services issued a four-year
installment note to be paid in four equal payments at the end of
each year. The payments include interest at the rate of 8%. (FV of
$1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of...
American Food Services, Inc., acquired a packaging machine from Barton and Barton Corporation. Barton and Barton...
American Food Services, Inc., acquired a packaging machine from
Barton and Barton Corporation. Barton and Barton completed
construction of the machine on January 1, 2021. In payment for the
$5.9 million machine, American Food Services issued a four-year
installment note to be paid in four equal payments at the end of
each year. The payments include interest at the rate of 11%. (FV of
$1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of...
Lancaster Services, Inc. leased equipment from Phillips Corporation. Phillips completed construction of the machine on January...
Lancaster Services, Inc. leased equipment from Phillips
Corporation. Phillips completed construction of the machine on
January 1, 2018. The lease agreement for the $8 million (fair value
and present value of the lease payments) machine specified four
equal payments at the end of each year. The useful life of the
machine was expected to be four years with no residual value.
Phillip's implicit interest rate was 10%.
Required:
1. Prepare the journal entry for Lancaster Services at the
beginning of...
Cobalt Ceramics, Inc., acquired a manufacturing facility (building) from Nickel Construction Company. Nickel completed construction of...
Cobalt Ceramics, Inc., acquired a manufacturing facility
(building) from Nickel Construction Company. Nickel completed
construction of the facility on January 1, 2021. In payment for the
$6 million lighthouse, Cobalt issued a five-year installment note
to be paid in five equal payments at the end of each year. The
payments include interest at the rate of 5.4%.
Instructions
Prepare the journal entry for Cobalt’s purchase of the facility
on January 1, 2021.
Prepare the journal entry for the first installment...
American Food Services, Inc. leased a packaging machine from Barton and Barton Corporation. Barton and Barton...
American Food Services, Inc. leased a packaging machine from
Barton and Barton Corporation. Barton and Barton completed
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for the $5.9 million (fair value and present value of the lease
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American Food Services, Inc., leased a packaging machine from
Barton and Barton Corporation. Barton and Barton completed
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American Food Services, Inc., leased a packaging machine from Barton and Barton Corporation. Barton and Barton...
American Food Services, Inc., leased a packaging machine from
Barton and Barton Corporation. Barton and Barton completed
construction of the machine on January 1, 2018. The lease agreement
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year. The useful life of the machine was expected to be five years
with no residual value. Barton and Barton’s implicit interest rate
was 11%. (FV of $1, PV...
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