Technologies Ltd constructed a conveyor for A&G Warehousers that was completed and ready for use on January 1, 2024. id for the conveyor by issuing a $100,000, four-year note that specified 5% interest to be paid on December 31 of each year. veyor was custom-built for A&G, so its cash price was unknown. By comparison with similar transactions it was determined that hable interest rate was 10%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) etables provided.) -d: re the journal entry for A&G's purchase of the conveyor on January 1, 2024. are an amortization schedule for the four-year term of the note. are the journal entry for A&G's third interest payment on December 31, 2026.

CONCEPTS IN FED.TAX.,2020-W/ACCESS
20th Edition
ISBN:9780357110362
Author:Murphy
Publisher:Murphy
Chapter11: Property Dispositions
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Braxton Technologies Ltd constructed a conveyor for A&G Warehousers that was completed and ready for use on January 1, 2024.
A&G paid for the conveyor by issuing a $100,000, four-year note that specified 5% interest to be paid on December 31 of each year.
The conveyor was custom-built for A&G, so its cash price was unknown. By comparison with similar transactions it was determined that
a reasonable interest rate was 10%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s)
from the tables provided.)
Required:
1. Prepare the journal entry for A&G's purchase of the conveyor on January 1, 2024.
2. Prepare an amortization schedule for the four-year term of the note.
3. Prepare the journal entry for A&G's third interest payment on December 31, 2026.
4. If A&G's note had been an installment note to be paid in four equal payments at the end of each year beginning December 31,
2024, what would be the amount of each installment?
5. Prepare an amortization schedule for the four-year term of the installment note.
6. Prepare the journal entry for A&G's third installment payment on December 31, 2026.
Complete this question by entering your answers in the tabs below.
Required 1
Required 2 Required 3 Required 4
Required 5 Required 6
Prepare an amortization schedule for the four-year term of the note. (Enter your answers in whole dollars.)
Years
Cash
Interest
Effective
Interest
2024
2025
2026
2027
Total
Increase in
Balance
Outstanding
Balance
Transcribed Image Text:Braxton Technologies Ltd constructed a conveyor for A&G Warehousers that was completed and ready for use on January 1, 2024. A&G paid for the conveyor by issuing a $100,000, four-year note that specified 5% interest to be paid on December 31 of each year. The conveyor was custom-built for A&G, so its cash price was unknown. By comparison with similar transactions it was determined that a reasonable interest rate was 10%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Prepare the journal entry for A&G's purchase of the conveyor on January 1, 2024. 2. Prepare an amortization schedule for the four-year term of the note. 3. Prepare the journal entry for A&G's third interest payment on December 31, 2026. 4. If A&G's note had been an installment note to be paid in four equal payments at the end of each year beginning December 31, 2024, what would be the amount of each installment? 5. Prepare an amortization schedule for the four-year term of the installment note. 6. Prepare the journal entry for A&G's third installment payment on December 31, 2026. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Prepare an amortization schedule for the four-year term of the note. (Enter your answers in whole dollars.) Years Cash Interest Effective Interest 2024 2025 2026 2027 Total Increase in Balance Outstanding Balance
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