equal installments every December 31, evidenced by a 12% promissory note. TheOn January 1, 2019, Candy Factory sold a franchise to sell its product for P5M. Theinitial fee is P500,000 upon signing the contract and the balance is payable in 5d.On January 1, 2019, Candy Factory sold a franchise to sell its product for PoMin 5 agreements provides that the franchisor will assist in the location of sitesupervision of the building construction, project study or market survey,assistance in the acquisition of facilities, training and management of personnel,quality control, advertising and promotion.On December 31, 2019, Candy Factory substantially performed all the servicesrequired by the contract at a cost of PIM.9. Determine the amount of franchise revenue to be recognized by Candy Factory forthe year 2019, if collectability of the note is assured.а.POС.P4,000,000b. P1,400,000d.P5,000,000

Revenue shall be recognised when it is accrued and earned. Revenue shall be recognised which…

equal installments every December 31, evidenced by a 12% promissory note. The On January 1, 2019, Candy Factory sold a franchise to sell its product for P5M. The initial fee is P500,000 upon signing the contract and the balance is payable in 5 a

equal installments every December 31, evidenced by a 12% promissory note. The On January 1, 2019, Candy Factory sold a franchise to sell its product for P5M. The initial fee is P500,000 upon signing the contract and the balance is payable in 5 a

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

ChapterM: Time Value Of Money Module

Section: Chapter Questions

Problem 8P: Serial Installments; Amounts Applicable to Interest and Principal Ronald McDuffie purchases a new...

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Spath Company borrows 75,000 by issuing a 4-year, noninterest-bearing note to a customer on January 1, 2019. In addition, Spath agrees to sell inventory to the customer at reduced prices over a 5-year period. Spaths incremental borrowing rate is 12%. The customer agrees to purchase an equal amount of inventory each year over the 5-year period so that a straight-line method of revenue recognition is appropriate. Required: Prepare the journal entries on Spaths books for 2019 and 2020. (Round answers to 2 decimal places.)
On October 1, 2019, Grahams WeedFeed Inc. signs a contract to maintain the grounds for BigData Corp. The contract ends on March 31, 2020, and has a monthly payment of 3,200. The contract does not include any stipulations for additional periods. On June 1, Grahams WeedFeed and BigData sign a new 12-month contract that is retroactive to April 1, 2020. The monthly fee for the new contract is 4,000 per month and is also retroactive to April 1, 2020. During April and May of 2020, while the new contract was being negotiated, Grahams Weed Feed continued to maintain the grounds, and BigData continued to pay 3,200 per month. BigData was satisfied with Grahams WeedFeeds performance, and the only issue during negotiations was the monthly fee. Required: Determine if a valid contract exists between Grahams WeedFeed and BigData during April and May 2020.
Short-Term Debt Expected to Be Refinanced On December 31, 2019, Atwood Table Company has 8 million of short-term notes payable owed to City National Bank. On February 1, 2020, Atwood negotiates a revolving credit agreement providing for unrestricted borrowings up to 6 million. Borrowings will bear interest at 1% over the prevailing prime rate, will have stated maturities of 120 days, and will be continuously renewable for 120-day periods for 4 years. Atwood plans to refinance as much as possible of the notes outstanding with the proceeds available from this agreement. Assume that Atwoods December 31, 2019, year-end financial statements are issued on March 30, 2020. Required: Prepare a partial December 31, 2019, balance sheet for Atwood showing how the 8 million short-term debt should be reported. Next Level What is the justification for allowing short-term debt that is expected to be refinanced to be classified as a long-term liability.
On July 1, 2019, Aldrich Company purchased as an available-for-sale security 200,000 face value, 9% U.S. Treasury notes for 194,000. The notes mature July 1, 2020, and pay interest semiannually on January 1 and July 1. The notes were sold on December 1, 2019, for 199,000. Aldrich normally uses straight-line amortization on all of its notes. In its income statement for the year ended December 31, 2019, what amount should Aldrich report as a gain on the sale of the available-for-sale security? a. 2,500 b. 3,500 c. 5,000 d. 6,000
Discounting of Notes Payable On October 30, 2019, Sanchez Company acquired a piece of machinery and signed a 12-month note for 24,000. The lace value of the note includes the price of the machinery and interest. The note is to be paid in four 6,000 quarterly installments. The value of the machinery is the present value of the four quarterly payments discounted at an annual interest rate of 16%. Required: 1. Prepare all the journal entries required to record the preceding information including the year-end adjusting entry and any payments. Present value techniques should be used. 2. Show how the preceding items would be reported on the December 31, 2019, balance sheet.
Jain Enterprises honors a short-term note payable. Principal on the note is $425,000, with an annual interest rate of 3.5%, due in 6 months. What journal entry is created when Jain honors the note?
Chemical Enterprises issues a note in the amount of $156,000 to a customer on January 1, 2018. Terms of the note show a maturity date of 36 months, and an annual interest rate of 8%. What is the accumulated interest entry if 9 months have passed since note establishment?
Comprehensive Notes Receivable On January 1, 2019, Seaver Company sold land with a book value of 23,000 to Bench Company. Bench paid 15,000 down and signed a 15,000 non-interest-bearing note, payable in two 7,500 annual installments on December 31, 2019, and 2020. Neither the fair value of the land nor of the note is determinable. Benchs incremental borrowing rate is 12%. Later in the year, on July 1, 2019, Seaver sold a building to Hane Company, accepting a 2-year, 100,000 non-interest-bearing note due July 1, 2021. The fair value of the building was 82,644.00 on the date of the sale. The building had been purchased at a cost of 90,000 on January 1, 2014, and had a book value of 67,500 on December 31, 2018. It was being depreciated on a straight-line basis (no residual value) over a 20-year life. Required: 1. Prepare all the journal entries on Seavers books for January 1, 2019, through December 31, 2020, in regard to the Bench note. 2. Prepare all the journal entries on Seavers books for July 1, 2019, through July 1, 2021, in regard to the Hane note. 3. Prepare the notes receivable portion of Seavers balance sheet on December 31, 2019 and 2020.
Serial Installments; Amounts Applicable to Interest and Principal Ronald McDuffie purchases a new car at a cost of 14,400. He pays 3,000 down and issues an installment note payable by which he promises to pay the balance in 18 equal monthly installments, which include interest at an annual rate of 18% on the remaining unpaid balance at the beginning of each month starting with the first month after the purchase. Required: 1. Compute the equal installment payments. 2. Compute the interest that will be paid for each of the first two periods. Indicate the amount of each payment that will be a reduction of principal.
Mystic Pizza Company purchases a franchise from NY Pizzeria Inc. for 96,000 on June 1, 2019. The franchise will last 8 years. Record Mystic Pizzas purchase of the franchise on June 1 and adjusting entry at the end of 2019.
Assurance-Type Warranty Clean-All Inc. sells washing machines with a 3-year assurance-type warranty. In the past, Clean-All has found that in the year after sale, warranty costs have been 3% of sales; in the second year after sale, 5% of sales; and in the third year after sale, 7% of sales. The following data are also available: Required: 1. Prepare the journal entries for the preceding transactions for 20192021. Closing entries are not required. 2. What amount would Clean-All report as a liability on its December 31, 2021, balance sheet, assuming the liability had a balance of 88,200 on December 31, 2018? 3. Next Level How would the failure to recognize a contingent liability affect the financial statements?
Non-Interest-Bearing Note Payable: Present Value On January 1, 2019, Northern Manufacturing Company bought a piece of equipment by signing a non-interest-bearing 80,000, 1-year note. The face value of the note includes the price of the equipment and the interest. The effective interest rate is an annual rate of 16%, and the note is to be paid in four 20,000 quarterly installments on March 31, June 30, September 30, and December 31. The price of the equipment is the present value of the four payments discounted at the effective interest rate. Required: Prepare all journal entries to record the preceding information. Present value techniques should be used. If Northerns financial statements were issued on June 30, 2019, what amount would the company report as notes payable?