INTERMEDIATE ACCT VOL.2>CUSTOM<
9th Edition
ISBN: 9781307165067
Author: SPICELAND
Publisher: MCG/CREATE
expand_more
expand_more
format_list_bulleted
Textbook Question
Chapter 7, Problem 7.14E
Note receivable
• LO7–7
On June 30, 2018, the Esquire Company sold some merchandise to a customer for $30,000. In payment, Esquire agreed to accept a 6% note requiring the payment of interest and principal on March 31, 2019. The 6% rate is appropriate in this situation.
Required:
1. Prepare
2. If the December 31
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Exercise 5-16 (Algo) Deferred annuities [LO5-8] President Company purchased merchandise from Captain Corporation on September 30, 2024. Payment was made in the form of a noninterest-bearing note requiring President to make six annual payments of $7,800 on each September 30, beginning on September 30, 2027. Required: Calculate the amount at which President should record the note payable and corresponding purchase on September 30, 2024, assuming that an interest rate of 9% properly reflects the time value of money in this situation. Note: Use tables, Excel, or a financial calculator. Round your final answers to nearest whole dollar amount. Round your intermediate calculations to the nearest whole dollar. (FV of $1, PV of $1, FVA of $1, PVA of
EA14. LO 9.6 Arvan Patel is a customer of Bank’s Hardware Store. For Mr. Patel’s latest purchase on January 1, 2018, Bank’s Hardware issues a note with a principal amount of $480,000, 13% annual interest rate, and a 24-month maturity date on December 31, 2019. Record the journal entries for Bank’s Hardware Store for the following transactions. Note issuance Subsequent interest entry on December 31, 2018 Honored note entry at maturity on December 31, 2019. Solution
Exercise 5-16 (Algo) Deferred annuities [LO5-8]
President Company purchased merchandise from Captain Corporation on September 30, 2024. Payment was made in the form of a noninterest-bearing note requiring President to make six annual payments of $5,200 on each September 30, beginning on September 30, 2027.
Required:
Calculate the amount at which President should record the note payable and corresponding purchase on September 30, 2024, assuming that an interest rate of 11% properly reflects the time value of money in this situation.
Note: Use tables, Excel, or a financial calculator. Round your final answers to nearest whole dollar amount. Round your intermediate calculations to the nearest whole dollar. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)
Amount recorded:
Chapter 7 Solutions
INTERMEDIATE ACCT VOL.2>CUSTOM<
Ch. 7 - Prob. 7.1QCh. 7 - Prob. 7.2QCh. 7 - Prob. 7.3QCh. 7 - Prob. 7.4QCh. 7 - Prob. 7.5QCh. 7 - Prob. 7.6QCh. 7 - Distinguish between the gross and net methods of...Ch. 7 - Briefly explain the accounting treatment for sales...Ch. 7 - Explain the typical way companies account for...Ch. 7 - Briefly explain the difference between the income...
Ch. 7 - Prob. 7.11QCh. 7 - Is any special accounting treatment required for...Ch. 7 - Explain any possible differences between...Ch. 7 - Prob. 7.14QCh. 7 - What is meant by the discounting of a note...Ch. 7 - What are the key variables that influence a...Ch. 7 - Explain how the CECL model (introduced in ASU No....Ch. 7 - Prob. 7.18QCh. 7 - Prob. 7.19QCh. 7 - (Based on Appendix 7B) Marshall Companies, Inc.,...Ch. 7 - Prob. 7.21QCh. 7 - Prob. 7.1BECh. 7 - Prob. 7.2BECh. 7 - Prob. 7.3BECh. 7 - Cash discounts; gross method LO73 On December 28,...Ch. 7 - Prob. 7.5BECh. 7 - Sales re turns LO74 During 2018, its first year...Ch. 7 - Sales re turns LO74 Refer to the situation...Ch. 7 - Prob. 7.8BECh. 7 - Prob. 7.9BECh. 7 - Uncollectible accounts; balance sheet approach ...Ch. 7 - Uncollectible accounts; solving for unknown LO75,...Ch. 7 - Prob. 7.12BECh. 7 - Note receivable LO77 On December 1, 2018,...Ch. 7 - Long-term notes receivable LO74 On April 19,...Ch. 7 - Prob. 7.15BECh. 7 - Factoring of accounts receivable LO78 Refer to...Ch. 7 - Prob. 7.17BECh. 7 - Discounting a note LO78 On March 31, Dower...Ch. 7 - Receivables turnover LO78 Camden Hardwares credit...Ch. 7 - Prob. 7.20BECh. 7 - Prob. 7.21BECh. 7 - Impairments of Accounts Receivable Appendix 7B...Ch. 7 - Credit Losses on Accounts Receivable (CECL Model) ...Ch. 7 - Prob. 7.1ECh. 7 - Prob. 7.2ECh. 7 - Prob. 7.3ECh. 7 - Prob. 7.4ECh. 7 - Trade and cash discounts; the gross method and the...Ch. 7 - Prob. 7.6ECh. 7 - Cash discounts; the net method LO73 [This is a...Ch. 7 - Sales returns LO74 Halifax Manufacturing allows...Ch. 7 - Prob. 7.9ECh. 7 - Prob. 7.10ECh. 7 - Uncollectible accounts; allowance method; balance...Ch. 7 - Uncollectible accounts; allowance method and...Ch. 7 - Uncollectible accounts; allowance method; solving...Ch. 7 - Note receivable LO77 On June 30, 2018, the...Ch. 7 - Noninterest-bearing note receivable LO77 [This is...Ch. 7 - Long-term notes receivable LO77 On January 1,...Ch. 7 - Prob. 7.17ECh. 7 - Prob. 7.18ECh. 7 - Prob. 7.19ECh. 7 - Factoring of accounts receivable with recourse ...Ch. 7 - Factoring of accounts receivable with recourse...Ch. 7 - Discounting a note receivable LO78 Selkirk...Ch. 7 - Concepts; terminology LO71 through LO78 Listed...Ch. 7 - Receivables; transaction analysis LO73, LO75...Ch. 7 - Prob. 7.25ECh. 7 - Prob. 7.26ECh. 7 - Prob. 7.27ECh. 7 - Prob. 7.28ECh. 7 - Prob. 7.29ECh. 7 - Prob. 7.30ECh. 7 - Impairments of Notes Receivable Appendix 7B At...Ch. 7 - Prob. 7.32ECh. 7 - Prob. 7.33ECh. 7 - Prob. 7.34ECh. 7 - Uncollectible accounts; allowance method; income...Ch. 7 - Uncollectible accounts; Amdahl LO75 Real World...Ch. 7 - Bad debts; Nike, Inc. LO75 Real World Financials...Ch. 7 - Uncollectible accounts LO75, LO76 Raintree...Ch. 7 - Prob. 7.5PCh. 7 - Notes receivable; solving for unknowns LO77...Ch. 7 - Prob. 7.7PCh. 7 - Prob. 7.8PCh. 7 - Prob. 7.9PCh. 7 - Prob. 7.10PCh. 7 - Prob. 7.11PCh. 7 - Accounts and notes receivable; discounting a note...Ch. 7 - Prob. 7.13PCh. 7 - Prob. 7.14PCh. 7 - Prob. 7.15PCh. 7 - Prob. 7.16PCh. 7 - Prob. 7.17PCh. 7 - Prob. 7.1BYPCh. 7 - Prob. 7.2BYPCh. 7 - Prob. 7.3BYPCh. 7 - Real World Case 74 Sales returns; Green Mountain...Ch. 7 - Ethics Case 75 Uncollectible accounts LO75 You...Ch. 7 - Prob. 7.6BYPCh. 7 - Prob. 7.7BYPCh. 7 - Prob. 7.8BYPCh. 7 - Prob. 7.9BYPCh. 7 - Prob. 7.10BYPCh. 7 - Prob. 7.11BYPCh. 7 - Prob. 1CCTC
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Prepare all necessary entries in general journal form for Garfield Corp. E7.13 (LO 4) (Note Transactions at Unrealistic Interest Rates) On July 1, 2020, Agincourt Inc. made two sales. 1. It sold land having a fair value of $700,000 in exchange for a 4-year zero-interest-bearing promissory note in the face amount of $1,101,460. The land is carried on Agincourt’s books at a cost of $590,000. 2. It rendered services in exchange for a 3%, 8-year promissory note having a face value of $400,000 (interest payable annually). Agincourt Inc. recently had to pay 8% interest for money that it borrowed from British National Bank. The customers in these two transactions have credit ratings that require them to borrow money at 12% interest. Instructions Record the two journal entries that should be recorded by Agincourt Inc. for the sales transactions above that took place on July 1, 2020.arrow_forwardblock c/2019/4 On 31.12.t1, Frieda OHG has trade receivables with a book value of € 35,700, which also includes receivables from Alma AG in the amount of € 11,900 and from Belma AG in the amount of € 5,950 . On 31.12. t0, Frieda OHG had accounted for supposedly secure receivables in the amount of € 23,800 gross. Create the posting records for the following business transactions in year t1: Frieda OHG considers it likely that only 30% of the claim against Alma AG will be received. Insolvency proceedings are opened against Belma AG and an entry rate of 80% is set by the insolvency administrator with regard to the claim of Frieda OHG. It is known from the past that approximately 2% of receivables that are not individually impaired are not paid. Alma AG transfers € 5,950 to Frieda OHGarrow_forwardHw.128. A business borrowed $200,000 on January 1, 2019 to be paid back on January 1 2022. On January 1, 2019, the business received an amount equal to $200,000, less discounted interest based on 11.5% per year, which is the market rate. The company closes its books every December 31. a. Prepare the journal entry for the debtor on January 1, 2019. b. Prepare the journal entry on December 31, 2020 related to this debt. Suppose that the company from the previous exercise number 4 received the full sum of $200,000 on January 1, 2019 and committed to repay the loan by making three annual payments (January 1 of 2020, 2021 and 2022) equal based on an interest rate of 11.5%.arrow_forward
- E6.14 (LO 5) (Gift Card Sales and Redemptions) During December 2023, Soft Skin Ltd. sells $20,000 of gift cards to customers. From reliable past experience, management estimates that 8% of the gift cards sold will not be redeemed by customers. In January 2024, $2,000 of these cards is redeemed for merchandise with a cost of $1,500. In February 2024, a further $10,000 of these cards is redeemed for merchandise with a cost of $8,000. The company uses a perpetual inventory system and has a February 28 year end Instructions Prepare the journal entry needed for December 2023. Prepare the journal entry needed for the January 2024 redemptions. Round to the nearest dollar. Prepare the journal entry needed for the February 2024 redemptions. Round to the nearest dollar. What amount, if any, will appear on the SFP concerning gift cards at February 28, 2024? Note:- Do not provide handwritten…arrow_forward(M1) Problem 8-79A (Algorithmic) Warranties Mason Auto Repair specializes in the repair of foreign car transmissions. To encourage business, Mason offers a 6-month warranty on all repairs. The following data are available for 2019: Transmissions repaired, 2019 3,400 Expected frequency of warranty claims 0.03 per repair Actual warranty claims, 2019 $38,000 Estimated warranty liability, 1/1/19 $30,200 Estimated cost of each warranty claim $340 Assume that warranty claims are paid in cash. Required: Question Content Area 1. Compute the warranty expense for 2019. $fill in the blank 84c914063045079_1 Question Content Area 2. Prepare the entry to record the payment of the 2019 warranty claims. blank - Select - - Select - (Record payment of claims) Question Content Area 3. Conceptual Connection: What is the December 31, 2019, balance in the estimated warranty liability account? $fill in the blank 86ed56039fddf91_1 Why has the balance in the estimated warranty liability account changed from…arrow_forwardIA 9. Problem Solving. A promissory note which is dated October 1, 20A was received from a client for service delivered by the ML Company for P450,500. Its term is 90 days and carries with it an 12% interest. On November 15, 20A, due to financial difficulty, ML company have the client’s promissory note discounted to a C19 Financing even at 18% discount. Pertaining to this transaction alone, compute the net amount of increase in profit assuming the bank was paid by its client on the said due date. Although we assume 360 days a year, use the actual number of days of each month mentioned. Round off final answer to the nearest peso.arrow_forward
- H5. Required information Skip to question [The following information applies to the questions displayed below.] On January 1, 2021, Eagle Company borrows $21,000 cash by signing a four-year, 5% installment note. The note requires four equal payments of $5,922, consisting of accrued interest and principal on December 31 of each year from 2021 through 2024. Prepare an amortization table for this installment note. (Round all amounts to the nearest whole dollar.)arrow_forwardSh.13. December 31. 2024 January 13 Negotiated a revolving credit agreement with Parish Bank that can be renewed annually upon bank approval. The amount available under the line of credit is $25.0 million at the bank’s prime rate. February 1 Arranged a three-month bank loan of $2.0 million with Parish Bank under the line of credit agreement. Interest at the prime rate of 13% was payable at maturity. May 1 Paid the 13% note at maturity. December 1 Supported by the credit line, issued $17.6 million of commercial paper on a nine-month note. Interest was discounted at issuance at a 12% discount rate. December 31 Recorded any necessary adjusting entry(s). 2025 September 1 Paid the commercial paper at maturity. Required: Prepare the appropriate journal entries through the maturity of each liabil ity.arrow_forwardProblem 8:On January 1 2019, Sunrise Company is experiencing extreme financial pressure and is in default in meeting interest payment on its long term note of P6,000,000 due on December 31, 2020. The interest rate is 12% payable every December 31. The accrued interest payable on January 1, 2019 is P720,000.In the agreement with the creditor, Sunrise Company obtain the following changes in the terms of note:a. The accrued interest on January 1, 2019 is forgiven.b. The principal is reduced by P500,000.c. The new interest rate is 8% payable in every December 31.d. The new date of maturity is December 31, 2022.The present value of 1 at 12% for four period is 0.6355 and the present value of an ordinary annuity of 1 at 12% for four period is 3.0373.Required:1. Journal entry to record the modification of terms on January 1, 2019.2. Journal entry to record the interest payment and amortization of discount for 2019.___________________________________________________________________________arrow_forward
- 16. On 1 January 2022, Marina Tower exchanged equipment for an $800,000 zero-interest-bearing note due on January 1, 2023. The prevailing rate of interest for a note of this type at January 1, 2020 was 10%. The present value of $1 at 10% for three periods is 0.75. What amount of interest revenue should be included in Marina's 2023 income statement?Question 16Answera.$60,000b.$66,000c.$0d.$80,000. please answer do not image formatarrow_forwardPROBLEM 5On January 1, 2021, Joy Company sold used equipment and received a non-interest bearing note requiring payment of P2,000,000 principal on December 31, 2022. The prevailing rate of interest for this type of note at the date of issuance is 10%.On January 1, 2022, to augment the company's cash requirement, Joy Company discounted the note to a financial institution at 14%. On December 31, 2022, the factor collected in full the notes receivable. The discounting is accounted for as a secured borrowing. Requirement:1. Prepare the necessary journal entry to record the above transactions.2. How much is the carrying value of the notes receivable at December 31, 2021?3. Assuming the customer failed to pay the notes on December 31, 2022, prepare the journal entry to record the dishonored note.arrow_forwardProblem 27 On January 1, 2022, De Vera Company loaned Dagpin Company amounting to P2,000,000 and received a two-year, 6%, P2,000,000 note. The note calls for annual interest to be paid each December 31. De Vera collected the 2022 interest on schedule. However, on December 31, 2023, based on the Dagpin’s recent financial difficulties, De Vera expects that the 2023 interest, which was recorded in the books, will not be collected and that only P1,200,000 of the principal will be recovered. The P1,200,000 principal amount is expected to be collected in two equal installments on December 31, 2025 and December 31, 2027. The prevailing interest rate for similar type of note as of December 31, 2023 is 8%. What is the loan impairment loss to be recognized for the year 2023 How much is the interest income for the year 2025? The carrying amount of the loan as of December 31, 2026 is:arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education
7.2 Ch 7: Notes Payable and Interest, Revenue recognition explained; Author: Accounting Prof - making it easy, The finance storyteller;https://www.youtube.com/watch?v=wMC3wCdPnRg;License: Standard YouTube License, CC-BY