On January 2, 2009, Easy Pay Co. sold aplant to Menchie Co. for P1,500,000. On thatdate, the plant's carrying amount wasP1,000,000. Menchie gave Easy PayP300,000 cash and a P1,200,000 note,payable in four annual installments ofP300,000 plus 12% interest. Menchie madethe first principal and interest payment ofP444,000 on December 31, 2009. Easy Payuses the installment method of revenuerecognition. In its 2009 income statement,what amount of realized gross profit shouldEasy Pay report?

Sales Price of Plant=P1,500,000 Cost or carrying value=P1,000,000 Gross Profit=P500,000 Sales…

Answered: On January 2, 2009, Easy Pay Co. sold a…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 1PA: On January 1, 2018, King Inc. borrowed $150,000 and signed a 5-year, note payable with a 10%...

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On January 1, Kilgore Inc. accepts a 20,000 non-interest-bearing, 5-year note from Dieland Company for equipment. Neither the fair value of the note nor the equipment is determinable. Kilgore had originally purchased the equipment for 18,000, and the equipment has a book value of 14,000 on January 1. Kilgore knows Dielands incremental borrowing rate of 9%. Prepare the journal entry for Kilgore to record the sale of the equipment on January 1.
Whirlie Inc. issued $300,000 face value, 10% paid annually, 10-year bonds for $319,251 when the market of interest was 9%. The company uses the effective-interest method of amortization. At the end of the year, the company will record ________. A. a credit to cash for $28,733 B. a debit to interest expense for $31,267 C. a debit to Discount on Bonds Payable for $1,267 D. a debit to Premium on Bonds Payable for $1.267
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
Halep Inc. borrowed $30,000 from Davis Bank and signed a 4-year note payable stating the interest rate was 4% compounded annually. Halep Inc. will make payments of $8,264.70 at the end of each year. Prepare an amortization table showing the principal and interest in each payment.
On January 1, 2019, Park Company accepted a 36,000, non-interest-bearing, 3-year note from a major customer in exchange for used equipment. The equipment had originally cost Park 200,000 and had a book value of 20,000 on the date of the sale. At the 12% imputed interest rate for this type of loan, the present value of the note is 25,500 on January 1, 2019. Park uses the effective interest rate. What is the carrying value of the note receivable on Parks December 31, 2019, balance sheet? a. 28,560 b. 29,000 c. 32,500 d. 36,000
Sharapovich Inc. borrowed $50,000 from Kerber Bank and signed a 5-year note payable stating the interest rate was 5% compounded annually. Sharapovich Inc. will make payments of $11,548.74 at the end of each year. Prepare an amortization table showing the principal and interest in each payment.
Steele Corp. purchases equipment for $30,000. Regarding the purchase, Steele paid shipping of $1,200, paid installation fees of $2,750, pays annual maintenance cost of $250, and received a 10% discount on sales price. Determine the acquisition cost of the equipment.
On August 1, 2019, Kern Company leased a machine to Day Company for a 6-year period requiring payments of 10,000 at the beginning of each year. The machine cost 40,000 and has a useful life of 8 years with no residual value. Kerns implicit interest rate is 10%, and present value factors are as follows: Present value for an annuity due of 1 at 10% for 6 periods4.791 Present value for an annuity due of 1 at 10% for 8 periods5.868 Kern appropriately recorded the lease as a sales-type lease. At the inception of the lease, the Lease Receivable account balance should be: a. 60,000 b. 58,680 c. 48,000 d. 47,910
On December 31, 2010, Clark Inc. sold construction equipment to Build Company for P3,600,000. The equipment had a cost of P2,400,000. Build Company paid P600,000 cash on December 31, 2010 and signed a P3,000,000 interest bearing note at 10 percent payable in five annual installments of P600,000. Clark Inc. appropriately accounted for the sale under the installment method. On December 31, 2011, Build Company paid P900,000 including interest of P300,000. For the year ended December 31, 2011, what total amount of revenue (including interest) should Clark Inc. recognize from the construction equipment sale and financing? a. 300,000 b. 200,000 c. 500,000 d. 240,000
On December 31, 2010, Clark Inc. sold construction equipment to Build Company for P3,600,000. The equipment had a cost of P2,400,000. Build Company paid P600,000 cash on December 31, 2010 and signed a P3,000,000 interest bearing note at 10 percent payable in five annual installments of P600,000. Clark Inc. appropriately accounted for the sale under the installment method. On December 31, 2011, Build Company paid P900,000 including interest of P300,000. For the year ended December 31, 2011, what total amount of revenue (including interest) should Clark Inc. recognize from the construction equipment sale and financing?

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