Question

In: Accounting

On 1/1/2020, Star sold a machine with the following terms to Eagle Inc.: cash received $20,000,...

  1. On 1/1/2020, Star sold a machine with the following terms to Eagle Inc.: cash received $20,000, $40,000 5% (state rate) note receivable due in 5 years with interest payable 1/1 and . Eagle’s cost of capital is 6%. The original cost of the machine was $25,000 with an accumulated depreciation of $11,000.

The present value of the note is ________________________

The entry Star (seller) would record is:

The entry Eagle (buyer) would record is:

Prepare the first 4 periods of the amortization schedule for the note that Eagle (the Buyer) would prepare. You only need to show the first 4 periods. Label the amortization schedule with account names and debits/credits:

Solutions

Expert Solution

Present value of Notes:
Amount of notes receivable after 5 years 40000.00
Multiply: PVF at 6% for 5 year 0.747258
Present value of notes 29890.32
Journal entry:
S.no. Accounts title and explanation Debit $ Credit $
a. Accumulated depreciation 11000.00
Cash 20,000
Notes receivable 40,000
    Equipment 25,000
    Interest receivable 10110
    Gain on sale of assets (20,000+29890-14000) 35890
(for sale of equipment)
Amort Chart:
Year Interest Interest receivable Interest Carrying value
revenue receivable receivable of Notes receivable
Credited debited balance
0 10110.00 29890.00
1 1793 1,793 8317.00 31683.40
2 1901 1,901 6416.00 33584.40
3 2015 2,015 4401.00 35599.40
4 2136 2,136 2265.00 37735.40
5 2265 2,265 0.00 40000.00

ekkarill92 answered 3 years ago
Next > < Previous

Related Solutions

On 1/1/2020, Star sold a machine with the following terms to Eagle Inc.: cash received $20,000,...
On 1/1/2020, Star sold a machine with the following terms to Eagle Inc.: cash received $20,000, $40,000 5% (state rate) note receivable due in 5 years with interest payable 1/1 and . Eagle’s cost of capital is 6%. The original cost of the machine was $25,000 with an accumulated depreciation of $11,000. The present value of the note is ________________________ The entry Star (seller) would record is: The entry Eagle (buyer) would record is: Prepare the first 4 periods of...
Partner A received the following in a nonliquidating distribution: Basis FMV Cash $20,000 $20,000 Inventory Item...
Partner A received the following in a nonliquidating distribution: Basis FMV Cash $20,000 $20,000 Inventory Item 1 $15,000 $18,000 Inventory Item 2 $12,000 $4,000 Capital Asset 1 $15,000 $8,000 Capital Asset 2 $10,000 $20,000 $72,000 $70,000 Assume A’s basis in the partnership before the distribution was $35,000. What would the bases of the assets be to A?
On September 1, 2020, Betty DeRose, Inc. received $45,000 cash from a customer as payment for...
On September 1, 2020, Betty DeRose, Inc. received $45,000 cash from a customer as payment for services to be performed over the next 24 months. Betty DeRose, Inc. received $45,000 cash from another customer on May 31, 2021 as payment for services to be performed over the next 18 months. Calculate the total amount of unearned revenue that would appear in Betty DeRose, Inc's December 31, 2021 balance sheet.
On October 1, 2020, Pearl Equipment Company sold a pecan-harvesting machine to Valco Brothers Farm, Inc....
On October 1, 2020, Pearl Equipment Company sold a pecan-harvesting machine to Valco Brothers Farm, Inc. In lieu of a cash payment Valco Brothers Farm gave Arden a 2-year, $171,200, 10% note (a realistic rate of interest for a note of this type). The note required interest to be paid annually on October 1. Pearl’s financial statements are prepared on a calendar-year basis. Assuming Valco Brothers Farm fulfills all the terms of the note, prepare the necessary journal entries for...
On October 1, 2020, Monty Equipment Company sold a pecan-harvesting machine to Valco Brothers Farm, Inc....
On October 1, 2020, Monty Equipment Company sold a pecan-harvesting machine to Valco Brothers Farm, Inc. In lieu of a cash payment Valco Brothers Farm gave Arden a 2-year, $193,200, 10% note (a realistic rate of interest for a note of this type). The note required interest to be paid annually on October 1. Monty’s financial statements are prepared on a calendar-year basis. Assuming Valco Brothers Farm fulfills all the terms of the note, prepare the necessary journal entries for...
On October 1, 2020, Sage Equipment Company sold a pecan-harvesting machine to Valco Brothers Farm, Inc....
On October 1, 2020, Sage Equipment Company sold a pecan-harvesting machine to Valco Brothers Farm, Inc. In lieu of a cash payment Valco Brothers Farm gave Arden a 2-year, $135,200, 8% note (a realistic rate of interest for a note of this type). The note required interest to be paid annually on October 1. Sage’s financial statements are prepared on a calendar-year basis. Assuming Valco Brothers Farm fulfills all the terms of the note, prepare the necessary journal entries for...
1)During 2020, Kevin received the following items: $5,000 unemployment compensation $10,000 inheritance $20,000 life insurance proceeds...
1)During 2020, Kevin received the following items: $5,000 unemployment compensation $10,000 inheritance $20,000 life insurance proceeds on account of mother’s death How much is Kevin required to include in gross income? 2) Len Landlord owns an apartment building. During the year he received: Rent payments………………….$10,000 Security deposit………………...     2,500 Advance rent payment………….     5,000 How much must Len include in income?
2. On March 1, 2016, Eagle Group Inc. sold $1,000,000, 9% bonds dated January 1, 2016...
2. On March 1, 2016, Eagle Group Inc. sold $1,000,000, 9% bonds dated January 1, 2016 for $1,105,256 plus $15,000 accrued interest. Interest is payable annually on January 1, and the bonds mature on January 1, 2026. On July 1, 2017 Eagle Group retired $300,000 of the bonds at 105 plus accrued interest. Eagle Group uses straight-line amortization.    Required:      Prepare the journal entry to record the redemption of $300,000 bonds on July 1, 2017. 3.    One way to...
2. On March 1, 2016, Eagle Group Inc. sold $1,000,000, 9% bonds dated January 1, 2016...
2. On March 1, 2016, Eagle Group Inc. sold $1,000,000, 9% bonds dated January 1, 2016 for $1,105,256 plus $15,000 accrued interest. Interest is payable annually on January 1, and the bonds mature on January 1, 2026. On July 1, 2017 Eagle Group retired $300,000 of the bonds at 105 plus accrued interest. Eagle Group uses straight-line amortization.    Required:      Prepare the journal entry to record the redemption of $300,000 bonds on July 1, 2017. 3.    One way to...
Cherokee Inc. is a merchandiser that provided the following information: Amount Number of units sold 20,000...
Cherokee Inc. is a merchandiser that provided the following information: Amount Number of units sold 20,000 Selling price per unit $ 30 Variable selling expense per unit $ 4 Variable administrative expense per unit $ 2 Total fixed selling expense $ 40,000 Total fixed administrative expense $ 30,000 Beginning merchandise inventory $ 24,000 Ending merchandise inventory $ 44,000 Merchandise purchases $ 180,000 Required: 1. Prepare a traditional income statement. 2. Prepare a contribution format income statement.
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT