Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN: 9781337788281
Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher: Cengage Learning
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Textbook Question
Chapter 14, Problem 12P
Hamlet Corporation purchases computer equipment at a price of $100,000 on January 1, 2019, paying $40,000 down and agreeing to pay the balance in three $20.000 annual instalments beginning December 31, 2019. It is not possible to value either the equipment or the $60,000 note directly; how-ever, Hamlet's incremental borrowing rate is 12%.
Required:
- 1. Prepare a schedule to compute the interest expense and discount amortization on the note.
- 2. Prepare all the
journal entries for Hamlet to record the issuance of the note, each annual interest expense, and the three annual installment payments.
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On January 1, 2018, Byner Company purchased a used tractor. Byner paid $5,000 down and signed a noninterest-bearing note requiring $25,000 to be paid on December 31, 2020. The fair value of the tractor is not determinable. An interest rate of 10% properly reflects the time value of money for this type of loan agreement. Thecompany’s fiscal year-end is December 31.Required:1. Prepare the journal entry to record the acquisition of the tractor. Round computations to the nearest dollar.2. How much interest expense will the company include in its 2018 and 2019 income statements for this note?3. What is the amount of the liability the company will report in its 2018 and 2019 balance sheets forthis note?
On January 1, 2021, Byner Company purchased a used tractor. Byner paid $5,000 down and signed a noninterestbearing note requiring $25,000 to be paid on December 31, 2023. The fair value of the tractor is not determinable. An interest rate of 10% properly reflects the time value of money for this type of loan agreement. The company’s fiscal year-end is December 31.
Required:1. Prepare the journal entry to record the acquisition of the tractor. Round computations to the nearest dollar.2. How much interest expense will the company include in its 2021 and 2022 income statements for this note?3. What is the amount of the liability the company will report in its 2021 and 2022 balance sheets for this note?
On January 1, 2019, Somerville Corporation sold a used truck to Cornelius Company and accepted a $28,000 non-interest-bearing note due January 1, 2020. Somerville carried the truck on its books at a cost of $30,000 and a current book value of $23,000. Neither the fair value of the truck nor the note was available at the time of the sale; however, Cornelius’s incremental borrowing rate was 12%.
Required:
1.
Prepare the journal entries on Somerville’s books to record:
a.
sale of the truck
b.
related adjusting entries on December 31, 2019, 2020, and 2021
c.
collection of the note on January 1, 2022
2.
Prepare the notes receivable portion of Somerville’s December 31, 2019, 2020, and 2021 balance sheets.
Chapter 14 Solutions
Intermediate Accounting: Reporting And Analysis
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Ch. 14 - Prob. 11GICh. 14 - Prob. 12GICh. 14 - Prob. 13GICh. 14 - Prob. 14GICh. 14 - What is a call provision? Why do companies often...Ch. 14 - Prob. 16GICh. 14 - When do companies recognize gains and losses from...Ch. 14 - Prob. 18GICh. 14 - Prob. 19GICh. 14 - Prob. 20GICh. 14 - Prob. 21GICh. 14 - Prob. 22GICh. 14 - Prob. 23GICh. 14 - Prob. 24GICh. 14 - Prob. 25GICh. 14 - Prob. 26GICh. 14 - Prob. 27GICh. 14 - Prob. 28GICh. 14 - On January 1, 2019, Bay Company issues bonds with...Ch. 14 - Prob. 2MCCh. 14 - Prob. 3MCCh. 14 - Prob. 4MCCh. 14 - Prob. 5MCCh. 14 - Prob. 6MCCh. 14 - Prob. 7MCCh. 14 - When the cash proceeds from a bond issued with...Ch. 14 - On December 31, 2019, Dare Corporation had...Ch. 14 - Prob. 10MCCh. 14 - On January 1, 2019, Onslow Company borrowed...Ch. 14 - (Appendix 14.1)Pamlico Company has a 500,000, 15%,...Ch. 14 - Prob. 1RECh. 14 - Refer to the information in RE14-1. Assume Canglon...Ch. 14 - Prob. 3RECh. 14 - Prob. 4RECh. 14 - Prob. 5RECh. 14 - Prob. 6RECh. 14 - Prob. 7RECh. 14 - Prob. 8RECh. 14 - Prob. 9RECh. 14 - Prob. 10RECh. 14 - On January 1, 2019, Langdon Co. issues bonds with...Ch. 14 - Nolan Corporation has outstanding convertible...Ch. 14 - On January 1, 2019, Branson Corporation issued...Ch. 14 - On January 1, 2019, Boater Company issues a 20,000...Ch. 14 - On January 2, 2019, Jennings Company purchases...Ch. 14 - Determining the Proceeds from Bond Issues Madison...Ch. 14 - Prob. 2ECh. 14 - Prob. 3ECh. 14 - On January 1, 2019, Knorr Corporation issued...Ch. 14 - On January 1, 2019, Hackman Corporation issued 1...Ch. 14 - Prob. 6ECh. 14 - Chowan Corporation issued 100,000 of 10% bonds...Ch. 14 - Prob. 8ECh. 14 - Taylor Company issued 100,000 of 13% bonds on...Ch. 14 - On January 1, 2019, Calvert Company issues 12%,...Ch. 14 - Prob. 11ECh. 14 - On October 1, 2019, Ball Company issued 9% bonds...Ch. 14 - Prob. 13ECh. 14 - Prob. 14ECh. 14 - On December 1, 2017, Cone Company issued its 10%,...Ch. 14 - Prob. 16ECh. 14 - Prob. 17ECh. 14 - On July 1, 2020, Tuttle Company had bonds payable...Ch. 14 - On January 1, 2019, Conroe Corporation sold...Ch. 14 - Prob. 20ECh. 14 - On July 2, 2018, McGraw Corporation issued 500,000...Ch. 14 - Prob. 22ECh. 14 - January 1, 2019, Johnson Corporation issued a...Ch. 14 - Spath Company borrows 75,000 by issuing a 4-year,...Ch. 14 - Webb Corporation purchased an asset from Shaw...Ch. 14 - On January 1, 2019, Sanders Corporation purchased...Ch. 14 - On January 1, 2019, Billips Corporation purchased...Ch. 14 - On January 1, 2019, Northfield Corporation becomes...Ch. 14 - Prob. 29ECh. 14 - Prob. 30ECh. 14 - Prob. 31ECh. 14 - Prob. 1PCh. 14 - Prob. 2PCh. 14 - Prob. 3PCh. 14 - Prob. 4PCh. 14 - Bats Corporation issued 800,000 of 12% face value...Ch. 14 - Prob. 6PCh. 14 - Wilbury Corporation issued 1 million of 13.5%...Ch. 14 - Prob. 8PCh. 14 - Prob. 9PCh. 14 - Prob. 10PCh. 14 - Prob. 11PCh. 14 - Hamlet Corporation purchases computer equipment at...Ch. 14 - Prob. 13PCh. 14 - Restructuring (Debtor) Oakwood Corporation is...Ch. 14 - Prob. 15PCh. 14 - Tenth National Bank has a 200,000, 12% note...Ch. 14 - Prob. 1CCh. 14 - One way for a corporation to accomplish long-term...Ch. 14 - Prob. 3CCh. 14 - Recording Convertible Debt Zakin Co. recently...Ch. 14 - Prob. 5CCh. 14 - Long-Term Notes Payable Business transactions...Ch. 14 - Prob. 7CCh. 14 - On January 1, 2019, Brewster Company issued 2,000...Ch. 14 - Prob. 9CCh. 14 - You are an accountant for Taos Company, which has...Ch. 14 - Prob. 11CCh. 14 - Prob. 12CCh. 14 - Prob. 13C
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