Solution:
Computation of value at which equipment is recorded in no. 2 journal entry above:
Equipment value = PV of all interest payments on notes + PV of Maturity value of Notes payable
= ($340,000*7%)*sum of pv factor @11% for 8 yrs. + $340,000/(1+.11)8
= $23,800*5.14612 + $147,535
= $122,477.66 + $147,535 = $270,013 (rounded off)
On January 1, 2020, Shamrock Company makes the two following acquisitions. 1. Purchases land having a...
On January 1, 2020, Sunland Company makes the two following acquisitions. 1. Purchases land having a fair value of $360,000 by issuing a 5-year, zero-interest-bearing promissory note in the face amount of $606,621. 2. Purchases equipment by issuing a 7%, 8-year promissory note having a maturity value of $560,000 (interest payable annually). The company has to pay 11% interest for funds from its bank. (a) Record the two journal entries that should be recorded by Sunland Company for the two...
On January 1, 2020, Carter Company makes the two following acquisitions. 1. Purchases land having a fair value of $ 200,000 by issuing a 5-year, zero-interest-bearing promissory note in the face amount of $337,012. 2. Purchases equipment by issuing a 6%, 8-year promissory note having a maturity value of $250,000 (interest payable annually). The company has to pay 11% interest for funds from its bank. (a) Record the two journal entries that should be recorded by Carter Company for the...
On January 1, 2020, Sandhill Company makes the two following
acquisitions.
1.
Purchases land having a fair value of $290,000 by issuing a
5-year, zero-interest-bearing promissory note in the face amount of
$467,048.
2.
Purchases equipment by issuing a 7%, 9-year promissory note
having a maturity value of $450,000 (interest payable
annually).
The company has to pay 10% interest for funds from its
bank.
(a)
Record the two journal entries that should be recorded by
Sandhill Company for the two...
Exercise 14-16 On January 1, 2020, Blue Sky Company makes the two following acquisitions. 1. Purchases land having a fair value of $360,000 by issuing a 5-year, zero-interest-bearing promissory note in the face amount of $606,621. 2. Purchases equipment by issuing a 7%, 8-year promissory note having a maturity value of $560,000 (interest payable annually). The company has to pay 11% interest for funds from its bank. (a) Record the two journal entries that should be recorded by Blue Sky...
On January 1, 2017, Vaughn Company makes the two following acquisitions. 1. Purchases land having a fair value of $290,000 by issuing a 4-year, zero-interest-bearing promissory note in the face amount of $440,240. 2. Purchases equipment by issuing a 6%, 8-year promissory note having a maturity value of $430,000 (interest payable annually on January 1). The company has to pay 11% interest for funds from its bank. (a) Record the two journal entries that should be recorded by Vaughn Company...
On January 1, 2017, Flounder Company makes the two following acquisitions 1. Purchases land having a fair value of $160,000 by issuing a 4-year, zero-interest-bearing promissory note in the face amount of $251,763. 2. Purchases equipment by issuing a 796, 8-year promissory note having a maturity value of $270,000 (interest payable annually on January 1) The company has to pay 12% interest for funds from its bank. Record the two jour nal entries that should be recorded by Flounder Company...
On January 1, 2020, Carter Company makes the two following
acquisitions.
1.
Purchases land having a fair
value of $200,000 by issuing a 5-year, zero-interest-bearing
promissory note in the face amount of $337,012.
2.
Purchases equipment by
issuing a 6%, 8-year promissory note having a maturity value of
$250,000 (interest payable annually).
The company has to pay 11% interest for funds from its
bank.
(a)
Record the two journal
entries that should be recorded by Carter Company for the two...
Exercise 14-16 On January 1, 2017, Martinez Company makes the two following acquisitions. 1. Purchases land having a fair value of $160,000 by issuing a 4-year, zero-interest-bearing promissory note in the face amount of $251,763. 2. Purchases equipment by issuing a 7%, 8-year promissory note having a maturity value of $270,000 (interest payable annually on January 1). The company has to pay 12% interest for funds from its bank. Record the two journal entries that should be recorded by Martinez...
Current Attempt in Progress On January 1, 2020, Metlock Company makes the two following acquisitions. Purchases land having a fair value of $360,000 by issuing a 4-year, zero-interest-bearing promissory note in the face amount of $566,467 Purchases equipment by issuing a 7%, 9-year promissory note having a maturity value of $520,000 (interest payable annually). 1. 2. The company has to pay 12% interest for funds from its bank. Record the two journal entries that should be recorded by Metlock Company...
On January 1, 2020, Flint Company makes the two following
acquisitions.
1.
Purchases land having a fair value of $160,000 by issuing a
4-year, zero-interest-bearing promissory note in the face amount of
$251,763.
2.
Purchases equipment by issuing a 7%, 8-year promissory note
having a maturity value of $270,000 (interest payable
annually).
The company has to pay 12% interest for funds from its
bank.
(a)
Record the two journal entries that should be recorded by Flint
Company for the two...