On January 1, 2021, Jalen Company purchased land costing $800,000. Instead of paying cash at the time of purchase, J

On January 1, 2021, Jalen Company purchased land costing $800,000. Instead of paying cash at the time of purchase, Jalen plans to make four installment payments of $215,221.64 on June 30 and December 31 in 2021 and 2022. The payments include interest at a rate of 6%.

Required:

1. Record the purchase of land when the note is issued.

2. Record the first installment payment on June 30, 2021, and the second installment payment on December 31, 2021.

3. Calculate the balance of Notes Payable and Interest Expense on December 31, 2021.

Expert Solution

a) Journal entry

Date	account and explanation	debit	Credit
Jan 1, 2021	Land	800000
	Notes payable		800000
	(To record purchase land)

b) Journal entry

Date	account and explanation	debit	credit
June 30, 2021	Interest expense (8000006%6/12)	24000
	Notes payable	191221.64
	Cash		215221.64
	(To record installment paid)

Dec 31, 2021	Interest expense (800000-191221.64)*6%	18263.35
	Notes payable	196958.29
	Cash		215221.64
	(To record amount paid)

3)

Interest expense on December 31, 2021 = 24000+18263.25 = 42263.25

Notes payable = 800000-191221.64-196958.29 = 411820.07

a) Journal entry

Date	account and explanation	debit	Credit
Jan 1, 2021	Land	800000
	Notes payable		800000
	(To record purchase land)

Junaid answered 2 years ago

On March 1, 2010, Packard Company purchased land for an office site by paying $600,000 cash....

On March 1, 2010, Packard Company purchased land for an office site by paying $600,000 cash. Packard began construction on the office building one year later on March 1, 2011. The following expenditures were incurred for construction on each of the respective dates: Date Amount March 1, 2011 $680,000 April 1, 2011 $352,000 May 1, 2011 $450,000 June 1, 2011 $520,000 The office was completed and ready for occupancy on July 1. To help pay for construction, $400,000 of common...

6. On January 1, 2019, Ginger Company purchased land and a building for a total cash...

6. On January 1, 2019, Ginger Company purchased land and a building for a total cash price of $6,900,000. Individually, the land was appraised at $2,250,000 and the building at $5,250,000. The buildings estimated useful life is 25 years and its estimated salvage value is $300,000. Required: a. Prepare the journal entry to record the purchase of land and building on January 1, 2019. b. What is the 2019 depreciation expense on the building, assuming that double declining-balance depreciation is...

On 1 July 2018, Adat Ltd. purchased land for $1,200,000 and buildings for $500,000 paying cash....

On 1 July 2018, Adat Ltd. purchased land for $1,200,000 and buildings for $500,000 paying cash. The estimated useful life of the buildings was 40 years, with $20,000 residual value. On 1 October 2018 machinery was purchased for cash at a total cost of $117,000. Installation costs of $3,000 were also paid. The estimated useful life of the machinery was 4 years with an estimated residual value of $8,000. Adat Ltd. uses straight line depreciation. The entity’s balance date...

On January 1, 2017, Beard Company purchased a machine for $800,000. The machine is expected to...

On January 1, 2017, Beard Company purchased a machine for $800,000. The machine is expected to have a 10-year life and no residual value. On January 1, 2017, it leased the machine to Ajax Company for a three-year period at an annual rental of $200,000 to be paid at the end of each year. The lease has an implicit interest rate of 8%. Ajax has adopted early the provisions of ASC 842 on January 1, 2017. What's the initial value...

A company is considering the purchase of a machine costing $800,000 and requiring an additional $40,000...

A company is considering the purchase of a machine costing $800,000 and requiring an additional $40,000 outlay for shipping and installation. The machine will require an initial investment in additional net working capital of $15,000. The machine will be used for 5 years, and then sold for an expected $200,000. Annually, the machine is expected to boost the company’s revenue by $195,000 but it will require operating costs (not including depreciation) of $20,000 annually. If purchased, the machine is to...

A. 1) August 6: Pane purchases land with cash. At the time of purchase, Pane also...

A. 1) August 6: Pane purchases land with cash. At the time of purchase, Pane also had to pay for survey fees and costs to demolish a building on the land. 9 Cost of Land $345,000 Demolish Building $2,000 Survey Fees $300 2) On December 31, Pane was notified that their one of their customers filed bankruptcy and would not be able to pay off their $2,000 account receivable. 3) March 12: Pane purchased a one year insurance policy with...

Sanders Co. issued $800,000 of 6% bonds on January 1, 2021, due on January 1, 2026,...

Sanders Co. issued $800,000 of 6% bonds on January 1, 2021, due on January 1, 2026, with interest payable each January 1 and July 1. The bonds were sold to yield 10%. If the discount were amortized by the effective-interest method, what amount of interest expense would Sanders report in 2021 related to the bond?

Suzy purchased 2 acres of vacant land in 2018 by paying $4,000 in cash at closing...

Suzy purchased 2 acres of vacant land in 2018 by paying $4,000 in cash at closing and borrowing $40,000 to be repaid at $8,000 per year for the next 5 years with interest on the unpaid balance at 10%. As part of the purchase agreement, Suzy agreed to let the seller store farm equipment on the land for 2 years (rental value of $1,000 per year). Suzy also pays legal, survey and title abstract fees of $700 on the purchase....

Some time ago, Julie purchased eleven acres of land costing $14,890. Today, that land is valued...

Some time ago, Julie purchased eleven acres of land costing $14,890. Today, that land is valued at $71,805. How long has she owned this land if the price of the land has been increasing at 6 percent per year? 27.13 years 26.51 years 27.00 years 26.72 years 26.67 years

On january 1, DogMart company purchased a two years liability insurance policy for $47900 Cash. the Purchase...

On january 1, DogMart company purchased a two years liability insurance policy for $47900 Cash. the Purchase was recorded to prepaid insurance. How much would be the january 31 amount recorded to expense (use two decimals)

Question