Question

In: Accounting

On December 31, 2019, AAA Security sold an alarm system to Wondermart in exchange for a...

On December 31, 2019, AAA Security sold an alarm system to Wondermart in exchange for a 3-year, $900,000 non-interest-bearing note. Wondermart will make three equal yearly payments to repay the note. AAA’s year-end is December 31. Wondermart would normally pay an interest rate of 5%.

Required

  1. Calculate the present value of the note and present a loan amortization table. AAA follows IFRS and therefore uses the effective interest method. Calculate amounts to the nearest dollar.
  2. Prepare all journal entries required for the note for AAA Security, from the initial sale to repayment.

Solutions

Expert Solution

In case of any doubts or Issues, please comment below

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

WALNUT GROVE TRIAL BALANCE For the Years Ended December 31, 2019 and December 31, 2020 2019...
WALNUT GROVE TRIAL BALANCE For the Years Ended December 31, 2019 and December 31, 2020 2019 2020 Debit Credit Debit Credit Cash          185,500 Accounts Receivable          125,600 Inventory             55,000 Prepaid Expenses                            - Building          275,000 Computers & Software             10,000 Furniture & Fixtures             25,000 Land             75,000 Machinery & Equipment                            - Accumulated Depreciation             15,385 Accounts Payable             48,500 Payroll Tax Payable                1,050 Sales Tax Payable                7,913 Unearned Revenue                            - Line of Credit          300,000 Notes Payable                            - Peters, J., Capital                2,500 Peters, M., Capital                2,500 Retained...
Prepare a balance sheet as of December 31, 2019. BUSINESS SOLUTIONS Balance Sheet December 31, 2019...
Prepare a balance sheet as of December 31, 2019. BUSINESS SOLUTIONS Balance Sheet December 31, 2019 Assets Cash Accounts receivable Prepaid insurance Prepaid insurance Prepaid rent Office equipment Accumulated depreciation—Office equipment 0 Accumulated depreciation—Computer equipment Computer equipment 0 Total Assets 0 Liabilities Accounts payable Wages payable Unearned computer services revenue Total Liabilities 0 Equity Retained earnings Common stock Total equity $0 Total Liabilities and Equity $0 After the success of the company’s first two months, Santana Rey continues to operate...
XYZ Company is considering the installation of a permanent security alarm system. It currently self-insures losses...
XYZ Company is considering the installation of a permanent security alarm system. It currently self-insures losses up to $50,000 and purchases insurance which covers losses in excess of $50,000 for an annual premium of $6000. The cost of the proposed alarm system is $20,000 and has a useful life of ten years. Assume that the loss distributions that XYZ faces for retained losses with or without an alarm system are the same as the distributions that ABC faced with or...
Riyadh Star, Balance Sheet Statement December 31, 2018 & December 31, 2019 2018 2019 Cash $        ...
Riyadh Star, Balance Sheet Statement December 31, 2018 & December 31, 2019 2018 2019 Cash $         104,000 $       123,250 Accounts Receivable             183,350           100,000 Inventory             250,000           210,000 Prepaid Expenses               80,000           120,000 Equipment (Net)             584,650           800,000 Total Assets $      1,202,000 $    1,353,250 Accounts Payable $         220,000 $       180,000 Salary Payable               94,000             56,250 Interest Payable               20,000             37,000 Bonds Payable             320,000           300,000 Common Shares             370,000           580,000 Retained Earnings...
During the year ended December 31, 2019, Parent Company (the parent) sold merchandise to Subsidiary Corporation...
During the year ended December 31, 2019, Parent Company (the parent) sold merchandise to Subsidiary Corporation (a 90%-owned subsidiary) for a price of $32,340, at a markup of 32% of cost. Subsidiary sold merchandise acquired from Parent to outsider customers for $38,500 during 2019. Included in Subsidiary’s January 1, 2019, inventories were goods acquired from Parent at a billed price of $3,036 and included in Subsidiary’s December 31, 2019, inventories were goods acquired from Parent at a billed price of...
Income Statement For the Period Ended December 31, 2019 Sales $636,000 Cost of goods sold 240,000...
Income Statement For the Period Ended December 31, 2019 Sales $636,000 Cost of goods sold 240,000 Gross Profit 396,000 Office expenses 242,000 Depreciation Expense 9,000 Income from Operations 145,000 Interest expense 0 Income before income tax 145,000 Income tax expense 120,000 Net Income $25,000 Comparative Balance Sheets December 31, 20XX 2019 2018 Assets Cash and cash equivalents 84,000 48,700 Accounts Receivable 53,600 50,000 Inventory 39,600 39,000 Prepaid expenses 5,500 15,000 Equipment 206,000 200,000 Accumulated Depreciation - Equipment (126,700) (117,700) Total...
Bergamo Bay's computer system generated the following trial balance on December 31, 2019. The company’s manager...
Bergamo Bay's computer system generated the following trial balance on December 31, 2019. The company’s manager knows something is wrong with the trial balance because it does not show any balance for Work in Process Inventory but does show a balance for the Factory Overhead account. In addition, the accrued factory payroll (Factory Wages Payable) has not been recorded. Debit Credit Cash $ 80,000 Accounts receivable 49,000 Raw materials inventory 29,500 Work in process inventory 0 Finished goods inventory 15,000...
Bergamo Bay's computer system generated the following trial balance on December 31, 2019. The company’s manager...
Bergamo Bay's computer system generated the following trial balance on December 31, 2019. The company’s manager knows something is wrong with the trial balance because it does not show any balance for Work in Process Inventory but does show a balance for the Factory Overhead account. In addition, the accrued factory payroll (Factory Wages Payable) has not been recorded. Debit Credit Cash $ 80,000 Accounts receivable 49,000 Raw materials inventory 29,500 Work in process inventory 0 Finished goods inventory 15,000...
What is the amount of retained earnings at December 31, 2019?
Obrien Industries began 2019 with retained earnings balance of $735,000. During 2019, the firm earned $280,000 after taxes. From this amount, preferred stock holders were paid $42,000 in dividends and common stock dividends were $175,000.   What is the amount of retained earnings at December 31, 2019?
Mango Stores financial year ends on 31 December each year. On 31 December 2019, the owner...
Mango Stores financial year ends on 31 December each year. On 31 December 2019, the owner of Mango Stores needed the financial statements in order to see how the entity has performed during the current financial year. Unfortunately, the bookkeeper of Mango Stores was sick and was not able to prepare the financial statements. The following list of accounts balance was provided to you by the bookkeeper as at 31 December 2019. Mango Stores Trial Balance as at 31 December...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT