On January 1, 2020, the first day of its accounting year, Lessor Inc., leased certain equipment at an annual payment of $10,254.19, receivable at the beginning of each year for 10 years. The first payment was received immediately. The equipment has an estimated useful life of 12 years and no residual value. Lessor’s implicit rate is 6%. Lessor had no other costs associated with this lease and properly classified the lease as a sales-type lease. The leased equipment was carried on Lessor Inc.’s books at $65,000.
Required
a. Calculate the value of the lease receivable at the commencement of the lease.
b. What amounts would be presented in the balance sheet as of December 31, 2020, related to this lease?
c. What amounts would be presented in the income statement for the year ended December 31, 2020, related
to this lease?
In: Accounting
On January 1, 2018, Surreal Manufacturing issued 670 bonds, each with a face value of $1,000, a stated interest rate of 3 percent paid annually on December 31, and a maturity date of December 31, 2020. On the issue date, the market interest rate was 4 percent, so the total proceeds from the bond issue were $651,410. Surreal uses the effective-interest bond amortization method and adjusts for any rounding errors when recording interest in the final year.
Required:
1. Prepare a bond amortization schedule.
2-5. Prepare the journal entries to record the bond issue, the interest payments on December 31, 2018 and 2019, the interest and face value payment on December 31, 2020 and the bond retirement. Assume the bonds are retired on January 1, 2020, at a price of 102.
In: Accounting
On January 1, 2018, Surreal Manufacturing issued 530 bonds, each with a face value of $1,000, a stated interest rate of 3 percent paid annually on December 31, and a maturity date of December 31, 2020. On the issue date, the market interest rate was 4 percent, so the total proceeds from the bond issue were $515,294. Surreal uses the simplified effective-interest bond amortization method and adjusts for any rounding errors when recording interest in the final year.
Required:
1. Prepare a bond amortization schedule.
2-5. Prepare the journal entries to record the bond issue, the interest payments on December 31, 2018 and 2019, the interest and face value payment on December 31, 2020 and the bond retirement. Assume the bonds are retired on January 1, 2020, at a price of 103.
In: Accounting
On January 1, 2019, FLOWERS Inc. rendered services in exchange for a four-year promissory note having a face value of $10,000. Interest at a rate of 3% is payable annually on January 1 (first payment Jan 1, 2020). The customer has credit ratings that require it to borrow money at 8% interest. FLOWERS uses IFRS. Required: Show and label all calculations. (Round to the nearest dollar.)
What would be the value of the service revenue recorded on January 1, 2019?
Prepare the full amortization table for note.
What is the value of the interest revenue recorded by FLOWERS in 2019?
What is the value of the interest revenue recorded by FLOWERS in 2020?
What is the value of note / interest receivable recorded by FLOWERS at its year end of December 31, 2020
In: Accounting
On January 1, 2018, Loop Raceway issued 580 bonds, each with a face value of $1,000, a stated interest rate of 5 percent paid annually on December 31, and a maturity date of December 31, 2020. On the issue date, the market interest rate was 6 percent, so the total proceeds from the bond issue were $564,485. Loop uses the straight-line bond amortization method and adjusts for any rounding errors when recording interest in the final year.
Required:
1. Prepare a bond amortization schedule.
2-5. Prepare the journal entries to record the bond issue, the interest payments on December 31, 2018 and 2019, the interest and face value payment on December 31, 2020 and the bond retirement. Assume the bonds are retired on January 1, 2020, at a price of 98.
In: Accounting
On January 1, 2018, Loop Raceway issued 580 bonds, each with a face value of $1,000, a stated interest rate of 5 percent paid annually on December 31, and a maturity date of December 31, 2020. On the issue date, the market interest rate was 6 percent, so the total proceeds from the bond issue were $564,485. Loop uses the straight-line bond amortization method and adjusts for any rounding errors when recording interest in the final year. Required: 1. Prepare a bond amortization schedule. 2-5. Prepare the journal entries to record the bond issue, the interest payments on December 31, 2018 and 2019, the interest and face value payment on December 31, 2020 and the bond retirement. Assume the bonds are retired on January 1, 2020, at a price of 98.
In: Accounting
On January 1, 2018, Loop Raceway issued 530 bonds, each with a face value of $1,000, a stated interest rate of 7 percent paid annually on December 31, and a maturity date of December 31, 2020. On the issue date, the market interest rate was 8 percent, so the total proceeds from the bond issue were $516,324. Loop uses the straight-line bond amortization method and adjusts for any rounding errors when recording interest in the final year.
Required:
1. Prepare a bond amortization schedule.
2-5. Prepare the journal entries to record the bond issue, the interest payments on December 31, 2018 and 2019, the interest and face value payment on December 31, 2020 and the bond retirement. Assume the bonds are retired on January 1, 2020, at a price of 99.
In: Accounting
Prepare a bank reconciliation dated December 31, 2020, for Nittany Inc. based on the following information.
∙ Balance per bank statement is $1,000.
∙ Balance per books is $900.
∙ The December bank statement indicated a service charge of $30.
∙ Cheque #1169 for $400 made out to a supplier was mailed, but not yet received by the bank.
. Cheque #1183 for $270 to a supplier was incorrectly posted by Nittany as $720 in the books.
∙ The bank had not received a deposit in transit of $900 when the bank statement was generated.
∙ A bank debit memo indicated an NSF cheque written by Bill Broke to Nittany Inc. on December 11, 2020, for $150.
∙ A bank credit memo indicated a bank collection of $300 and interest revenue of $30 on December 15, 2020. Nittany has yet to record this receipt
In: Accounting
Current Attempt in Progress
Presented below is the adjusted trial balance of Splish Corporation at December 31, 2020.
|
Debit |
Credit |
||
|---|---|---|---|
|
Cash |
$ ? |
||
|
Supplies |
1,340 |
||
|
Prepaid Insurance |
1,140 |
||
|
Equipment |
48,140 |
||
|
Accumulated Depreciation-Equipment |
$ 4,140 |
||
|
Trademarks |
1,090 |
||
|
Accounts Payable |
10,140 |
||
|
Salaries and Wages Payable |
640 |
||
|
Unearned Service Revenue |
2,140 |
||
|
Bonds Payable (due 2027) |
9,140 |
||
|
Common Stock |
10,140 |
||
|
Retained Earnings |
25,140 |
||
|
Service Revenue |
10,140 |
||
|
Salaries and Wages Expense |
9,140 |
||
|
Insurance Expense |
1,540 |
||
|
Rent Expense |
1,340 |
||
|
Interest Expense |
1,040 | ||
|
Total |
$ ? | $ ? |
Additional information:
| 1. | Net loss for the year was $2,920. | |
| 2. | No dividends were declared during 2020. |
Prepare a classified balance sheet as of December 31, 2020.
(List Current Assets in order of
liquidity.)
In: Accounting
On July 1, 2020, Dynamic Company purchased for cash 40% of the outstanding capital stock of Cart Company. Both Dynamic and Cart have a December 31 year-end. Cart, whose common stock is actively traded in the over-the-counter market, reported its total net income for the year to Dynamic and also paid cash dividends on November 15, 2020, to Dynamic and its other stockholders.
Required:
a. How should Dynamic report the foregoing facts in its December 31, 2020, balance sheet and its income statement for the year then ended? Discuss the rationale for your answer.
b. If Dynamic should elect to report its investment at fair value, how would its balance sheet and income statement differ from your answer to part (a)?
In: Accounting