payments of $53,000 are to be made at the beginning of each lease year (December 31). The interest rate used by the lessor in setting the payment schedule is 7%; Sheffield’s incremental borrowing rate is 9%. Sheffield is unaware of the rate being used by the lessor. At the end of the lease, Sheffield has the option to buy the equipment for $5,000, considerably below its estimated fair value at that time. The equipment has an estimated useful life of 7 years, with no salvage value. Sheffield uses the straight-line method of depreciation on similar owned equipment.

payments of $53,000 are to be made at the beginning of each lease year (December 31). The interest rate used by the lessor in setting the payment schedule is 7%; Sheffield’s incremental borrowing rate is 9%. Sheffield is unaware of the rate being used by the lessor. At the end of the lease, Sheffield has the option to buy the equipment for $5,000, considerably below its estimated fair value at that time. The equipment has an estimated useful life of 7 years, with no salvage value. Sheffield uses the straight-line method of depreciation on similar owned equipment.

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

Chapter6: Cash And Receivables

Section: Chapter Questions

Problem 17E: Interest-Bearing and Non-Interest-Bearing Notes On December 11, 2019, Hooper Inc. made a credit sale...

See similar textbooks

Similar questions

In December 2019, Swanstrom Inc. receives a cash payment of $3,500 for services performed in December 2019 and a cash payment of S4,500 for services to be performed in January 2020. Swanstrom also receives the December utility bill for S600 but does not pay this bill until 2020. For 2019, under the accrual basis of accounting, Swanstrom would recognize: a. $8,000 of revenue and $600 of expense. b. $8,000 of revenue and $0 of expense. c. $3,500 of revenue and $600 of expense. d. $3,500 Of revenue and $0 of expense.
Interest-Bearing and Non-Interest-Bearing Notes On December 11, 2019, Hooper Inc. made a credit sale to Marshall Company and required Marshall to sign a 12,000,60-day note. Required: Prepare the journal entries necessary to record the receipt of the note by Hooper, the accrual of interest on December 31, 2019, and the customers repayment on February 9, 2020, assuming: 1. Interest of 12% was in addition to the face value of the note. 2. The note was issued as a 12,000 non-interest-bearing note with a present value of 11,765. The implicit interest rate on the note receivable was 12%. Assume a 360-day year. (Round to the nearest dollar.)
Bravo Company purchased a two-year insurance policy on August 1, 2021 for P28,800. Using an asset method, the reversing entry shall entail? a. A debit to prepaid insurance of P6,000 b. A debit to insurance expense of P6,00 c. A debit to insurance expense of P22,800 d. A credit to insurance expense of P22,800. e. the answer is not given
1. Prepare the entry to record the write-off ofuncollectible accounts during 2019. 2. Prepare the entries to record the recovery ofthe uncollectible account during 2019 3. Prepare the entry to record bad debt expense(BDE) at the end of 2019. Ending balance ofAFDA was Rp18,200 (Cr.) 4. Determine the ending balance of AccountsReceivable as of December 31, 2019. 5. What is the net realizable value of thereceivables at the end of 2019? 6. The company has a notes receivable ofRp24,000 at January 15, 2019 for 3 months at10% interest rate. Prepare journal entry as ofApril 15, 2019, on its due date.
On June 7,2019, Dilby Mechanical Corp completed $50,00 of servicing work for a client and billed them for that amount plus a GST of $2,500 and PST of $3,50; terms are N20. Required: a. Prepare the journal entry as it would appear in Dilby's accounting records. b. Assume the receivable established on June 7 was collected on June 27. Record the entry.
On July 1, 2022, Blossom Company pays $18,000 to Sunland Company for a 2-year insurance contract. Both companies have fiscal years ending December 31. Journalize the entry on July 1 and the adjusting entry on December 31 for Sunland Company. Sunland uses the accounts Unearned Service Revenue and Service Revenue. (Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Can you explain why the notes payable amount $250,000 that is due at December 31st, 2021 is not included in the adjusted journal entries?
in december 2022, the fixed monthly insurance debit order was not processed due to an oversight by insurance company. this was rectified by Ss managing director, sam who informed the insurance company. On 2 January 2023 the insurance DEBIT order was processed twice, resulting in total deduction of R55000 from Ss bank account. the trail balance needs to be adjusted to account for this. Prepare the adjustment journal entries
On December 31,2019, Halen company performed environmental consulting services for Stuart Corporation was short of cash, and Halen company agreed to accept 900,000 zero-interest-bearing note due December 31,2021 as payment in full. Stuart Corporation is somewhat of a credit risk and typically borrows funds at a rate of10%. (PVIFA n=2,i=10% =1.7355 and PVIF n=2,i=10% =0.8264)Instruction :3.1 Prepare the journal entry to record the transaction of December 31, 2019, for Halen company.3.2 Assuming Halen’s fiscal year-end is December 31, prepare the journal entry for December 31,2020.
On October 1, 2024, Ogneva Corporation loans one of its employees $43,000 and accepts a 12-month, 8% note receivable. Required: Record (a) lending of $43,000 cash to an employee on October 1, 2024, (b) the adjusting entry for interest on December 31, 2024, and (c) collection of cash for the note and interest on October 1, 2025. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)
Under Fierce Company’s accounting system, all insurance premiums paid are charged to insurance expense. Information for the year ended December 31, 2020 is as follows: Prepaid insurance, beg. P150,000 Renewal of insurance charged to expense during the year applicable for the period April 1, 2020-2021 is P500,000. What is the insurance expense using the accrual basis accounting?
On July 1, 2022, Blossom Company pays $18,000 to Sunland Company for a 2-year insurance contract. Both companies have fiscal years ending December 31. (a1) For Blossom Company, journalize the entry on July 1 and the annual adjusting entry on December 31. (Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit choose a transaction date July 1Dec. 31 enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount choose a transaction date July 1Dec. 31 enter an account title enter a…