On December 31, 2017, Laser Inc. acquired a machine from Rocky Corporation by issuing a $600,000,...

On December 31, 2017, Laser Inc. acquired a machine from Rocky Corporation by issuing a $600,000, non–interest-bearing note that is payable in full on December 31, 2021. The company’s credit rating permits it to borrow funds from its several lines of credit at 10%. The machine is expected to have a five-year life and a $70,000 residual value.

(a) Calculate the value of the note and prepare the journal entry for the purchase on December 31, 2017. [2 Marks]

(b) Prepare any necessary adjusting entries related to depreciation of the asset (use straight-line) and amortization of the note (use the effective interest method) on December 31, 2018.

Solutions

Expert Solution

Answer -

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

On December 31, 2017, Laner Inc, acquired a machine from Rocky Corporation by insuing a $600,000,...

On December 31, 2017, Laner Inc, acquired a machine from Rocky Corporation by insuing a $600,000, non-interest-bearing note that is payable in full on December 31, 2021. The company's credit rating permits it to borrow funds from its severni lines of credit at 10% The machine is expected to have a five year life and a $70,000 residual value la) Calculate the value of the note and prepare the journal entry for the purchase on December 31, 2017. 2 Marks...

On December 31, 2015, Milton Company acquired a computer from Hamil Corporation by issuing a $600,000...

On December 31, 2015, Milton Company acquired a computer from Hamil Corporation by issuing a $600,000 zero-interest-bearing note, payable in full on December 31, 2019. Milton Company’s credit rating permits it to borrow funds from its several lines of credit at 10%. The computer is expected to have a 5-year life and a $70,000 residual value. Prepare the journal entry for the purchase on December 31, 2015 and any necessary adjusting entries relative to depreciation (use straight-line) and amortization on...

On December 31, 2017, Sheridan Company acquired a computer from Plato Corporation by issuing a $595,000...

On December 31, 2017, Sheridan Company acquired a computer from Plato Corporation by issuing a $595,000 zero-interest-bearing note, payable in full on December 31, 2021. Sheridan Company’s credit rating permits it to borrow funds from its several lines of credit at 12%. The computer is expected to have a 5-year life and a $75,000 salvage value. Prepare the journal entry for the purchase on December 31, 2017. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the...

On December 31, 2017, Vaughn Company acquired a computer from Plato Corporation by issuing a $595,000...

On December 31, 2017, Vaughn Company acquired a computer from Plato Corporation by issuing a $595,000 zero-interest-bearing note, payable in full on December 31, 2021. Vaughn Company’s credit rating permits it to borrow funds from its several lines of credit at 12%. The computer is expected to have a 5-year life and a $75,000 salvage value. 1-Prepare the journal entry for the purchase on December 31, 2017 2-Prepare any necessary adjusting entries relative to depreciation (use straight-line) and amortization (use...

Problem 14-8 On December 31, 2017, Flint Company acquired a computer from Plato Corporation by issuing...

Problem 14-8 On December 31, 2017, Flint Company acquired a computer from Plato Corporation by issuing a $557,000 zero-interest-bearing note, payable in full on December 31, 2021. Flint Company’s credit rating permits it to borrow funds from its several lines of credit at 10%. The computer is expected to have a 5-year life and a $63,000 salvage value. Your answer is partially correct. Try again. Prepare the journal entry for the purchase on December 31, 2017. (Round present value factor...

On December 31, 2020, Nash Company acquired a computer from Plato Corporation by issuing a $609,000...

On December 31, 2020, Nash Company acquired a computer from Plato Corporation by issuing a $609,000 zero-interest-bearing note, payable in full on December 31, 2024. Nash Company’s credit rating permits it to borrow funds from its several lines of credit at 12%. The computer is expected to have a 5-year life and a $63,000 salvage value. Prepare the journal entry for the purchase on December 31, 2020. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the...

On December 31, 2020, Cheyenne Company acquired a computer from Plato Corporation by issuing a $609,000...

On December 31, 2020, Cheyenne Company acquired a computer from Plato Corporation by issuing a $609,000 zero-interest-bearing note, payable in full on December 31, 2024. Cheyenne Company’s credit rating permits it to borrow funds from its several lines of credit at 12%. The computer is expected to have a 5-year life and a $63,000 salvage value. Prepare the journal entry for the purchase on December 31, 2020. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the...

On December 31, 2020, Sage Company acquired a computer from Plato Corporation by issuing a $650,000...

On December 31, 2020, Sage Company acquired a computer from Plato Corporation by issuing a $650,000 zero-interest-bearing note, payable in full on December 31, 2024. Sage Company’s credit rating permits it to borrow funds from its several lines of credit at 12%. The computer is expected to have a 5-year life and a $76,000 salvage value. 1. Prepare the journal entry for the purchase on December 31, 2020. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and...

Ramsey Corporation acquired a machine (7-year property) on December 31, 2017, at a cost of $2230000....

Ramsey Corporation acquired a machine (7-year property) on December 31, 2017, at a cost of $2230000. Ramsey Corproation has a taxable income from its business in 2017 of $1000000 and elects to expense the maximum amount under section 179 but elects out of bonus depreciation for the machine. Compute Ramsey's allowable expensing deduction under Section 179 and MACRS depreciation deduction for the machine for 2017. Assume the machine is the only depreciable personal property acquired by Ramsey Corporation during 2017.

Problem 14-08 On December 31, 2020, Teal Company acquired a computer from Plato Corporation by issuing...

Problem 14-08 On December 31, 2020, Teal Company acquired a computer from Plato Corporation by issuing a $591,000 zero-interest-bearing note, payable in full on December 31, 2024. Teal Company’s credit rating permits it to borrow funds from its several lines of credit at 12%. The computer is expected to have a 5-year life and a $63,000 salvage value. Prepare the journal entry for the purchase on December 31, 2020. (Round present value factor calculations to 5 decimal places, e.g. 1.25124...

Subjects