Question

In: Accounting

Discount Group names: On Jan 1, 2016, Zahid sold a truck to Othaim in exchange for...

Discount

Group names:
On Jan 1, 2016, Zahid sold a truck to Othaim in exchange for a $200,000, 6% (payable annually), 5 year, notes payable. On Jan 1, 2016, the market rate was 8%.
Amortization Table
Date Cash Received Int. Revenue Dis Amrt. Carrying Value
1-Jan-16
1-Jan-17
1-Jan-18
1-Jan-19
1-Jan-20
1-Jan-21
Requirements:
What is the sale revenue that Zaid should recognize on Jan 1, 2016?
What is the interest revenue that Zaid should recognize on Dec 31, 2016?
What is the Dis Amrt. that Zaid should recognize on Dec 31, 2018?
What is the carrying value of the notes on Dec 31, 2019?
What is the interest receivable related to the notes on Dec 31, 2020?

Solutions

Expert Solution
Face Amount $2,00,000.00
Rate 8%
Period 5
PMT $12,000.00
Present Value = PV(8%,5,-12000,-200000) $1,84,029.16
Amortization Schedule
A B C D G
Period Cash Received InterestRevenue.= 8% x Previous BV in G Amortisation of bond discount (B - c) Book value of bond previous bal - D
Jan-16 $1,84,029.16
Jan-17 $12,000.00 $14,722.33 $-2,722.33 $1,86,751.49
Jan-18 $12,000.00 $14,940.12 $-2,940.12 $1,89,691.61
Jan-19 $12,000.00 $15,175.33 $-3,175.33 $1,92,866.94
Jan-20 $12,000.00 $15,429.36 $-3,429.36 $1,96,296.30
Jan-21 $12,000.00 $15,703.70 $-3,703.70 $2,00,000.00
$60,000.00 $75,970.84 $-15,970.84
What is the sale revenue that Zaid should recognize on Jan 1, 2016? $1,84,029.16
What is the interest revenue that Zaid should recognize on Dec 31, 2016? $14,722.33
What is the Dis Amrt. that Zaid should recognize on Dec 31, 2018? $2,940.12
What is the carrying value of the notes on Dec 31, 2019? $1,92,866.94
What is the interest receivable related to the notes on Dec 31, 2020? $12,000.00

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

Premium Group names: On Jan 1, 2016, Zahid sold a truck to Othaim in exchange for...
Premium Group names: On Jan 1, 2016, Zahid sold a truck to Othaim in exchange for a $200,000, 6% (payable annually), 5 year, notes payable. On Jan 1, 2016, the market rate was 8%. Amortization Table Date Cash Received Int. Revenue Pre Amrt. Carrying Value 1-Jan-16 1-Jan-17 1-Jan-18 1-Jan-19 1-Jan-20 1-Jan-21 Requirements: What is the sale revenue that Zaid should recognize on Jan 1, 2016? What is the interest revenue that Zaid should recognize on Dec 31, 2016? What is...
On Jan 1, 2016, Zahid sold a truck to Othaim in exchange for a $200,000, 6%...
On Jan 1, 2016, Zahid sold a truck to Othaim in exchange for a $200,000, 6% (payable annually), 5 year, notes payable. On Jan 1, 2016, the market rate was 8%. Date Cash Received Int. Revenue Pre Amrt. Carrying Value 1-Jan-16 1-Jan-17 1-Jan-18 1-Jan-19 1-Jan-20 1-Jan-21 Requirements: (1) What is the sale revenue that Zaid should recognize on Jan 1, 2016? (2) What is the interest revenue that Zaid should recognize on Dec 31, 2016? (3) What is the Pre...
On Dec. 31, 2019: Sold a truck that was purchased at $25,000 on Jan. 1, 2017....
On Dec. 31, 2019: Sold a truck that was purchased at $25,000 on Jan. 1, 2017. (5 year life, salvage value $5,000, straight-line method). The truck was sold for $5,000. Which of the following is correct? Gain on disposal, $4,000 Loss on disposal, $4,000 Gain on disposal, $8,000 Loss on disposal, $8,000
1. R Company purchased $100,000 of 8% bonds on Jan 1, 2016 at a discount. They...
1. R Company purchased $100,000 of 8% bonds on Jan 1, 2016 at a discount. They paid $92,278. The bonds mature Jan 1, 2021 and yield a 10% rate. The intent of management is to hold the bonds until maturity. Assuming that interest is payable July 1 and Jan 1 create an effective interest amortization table. What is the amount of interest recognized in the period ended 1/1/17?
Swann Company sold a delivery truck on April 1, 2016. Swann had acquired the truck on...
Swann Company sold a delivery truck on April 1, 2016. Swann had acquired the truck on January 1, 2012, for $39,500. At acquisition, Swann had estimated that the truck would have an estimated life of 5 years and a residual value of $4,000. At December 31, 2015, the truck had a book value of $11,100. Required: 1. Prepare any necessary journal entries to record the sale of the truck, assuming it sold for: a. $11,025 b. $7,525 2. How should...
Swann Company sold a delivery truck on April 1, 2016. Swann had acquired the truck on...
Swann Company sold a delivery truck on April 1, 2016. Swann had acquired the truck on January 1, 2012, for $44,000. At acquisition, Swann had estimated that the truck would have an estimated life of 5 years and a residual value of $3,000. At December 31, 2015, the truck had a book value of $11,200. Required: 1. Prepare any necessary journal entries to record the sale of the truck, assuming it sold for: a. $10,600 b. $7,600 2. How should...
R Company purchased $100,000 of 8% bonds on Jan 1, 2016 at a discount. They paid...
R Company purchased $100,000 of 8% bonds on Jan 1, 2016 at a discount. They paid $92,278. The bonds mature Jan 1, 2021 and yield a 10% rate. The intent of management is to hold the bonds until maturity. Assuming that interest is payable July 1 and Jan 1 create an effective interest amortization table. What is the carrying value of the investment on 1/1/18 after the adjusting entry had been made? What is the amount of interest recognized in...
2016 Jan. 1 Paid $20,515 cash plus $1,935 in sales tax for a new delivery truck...
2016 Jan. 1 Paid $20,515 cash plus $1,935 in sales tax for a new delivery truck estimated to have a five-year life and a $2,150 salvage value. Delivery truck costs are recorded in the Trucks account. Dec. 31 Recorded annual straight-line depreciation on the truck. 2017 Dec. 31 Due to new information obtained earlier in the year, the truck’s estimated useful life was changed from five to four years, and the estimated salvage value was increased to $2,700. Recorded annual...
2016 Jan. 1 Paid $23,515 cash plus $1,785 in sales tax for a new delivery truck...
2016 Jan. 1 Paid $23,515 cash plus $1,785 in sales tax for a new delivery truck estimated to have a five-year life and a $2,450 salvage value. Delivery truck costs are recorded in the Trucks account. Dec. 31 Recorded annual straight-line depreciation on the truck. 2017 Dec. 31 Due to new information obtained earlier in the year, the truck’s estimated useful life was changed from five to four years, and the estimated salvage value was increased to $2,550. Recorded annual...
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...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT