Question

P7-7.   (Notes Receivable with Realistic Interest Rate) (LO 4) On December 31, 2017, Arden Farm Equipment...

P7-7.  

(Notes Receivable with Realistic Interest Rate)

(LO 4) On December 31, 2017, Arden Farm Equipment Company sold a pecan-harvesting machine to Valco Brothers Farm, Inc. In lieu of a cash payment Valco Brothers Farm gave Arden a 2-year, $120,000, 8% note (a realistic rate of interest for a note of this type). The note required interest to be paid annually on December 31. Arden's financial statements are prepared on a calendar-year basis.

Instructions

Assuming Valco Brothers Farm fulfills all the terms of the note, prepare the necessary journal entries for Arden Farm Equipment Company for the entire term of the note.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
Journal entries
S.no. Accounts title and explanations Debit $ Credit $
31.12.17 Notes receivable 120000
     Sales revenue 120000
(for sales made against notes receivable)
31.12.18 Cash account 9600
     Interest revenue (120000*8%) 9600
(for interest received)
31.12.19 Cash account 129600
     Interest revenue 9600
     Notes receivable 120000
(for amount received on maturity along with interest)
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
On October 1, 2017, Vaughn Equipment Company sold a pecan-harvesting machine to Valco Brothers Farm, Inc....
On October 1, 2017, Vaughn Equipment Company sold a pecan-harvesting machine to Valco Brothers Farm, Inc. In lieu of a cash payment Valco Brothers Farm gave Arden a 2-year, $138,800, 8% note (a realistic rate of interest for a note of this type). The note required interest to be paid annually on October 1. Vaughn’s financial statements are prepared on a calendar-year basis. Assuming Valco Brothers Farm fulfills all the terms of the note, prepare the necessary journal entries for...
On October 1, 2020, Monty Equipment Company sold a pecan-harvesting machine to Valco Brothers Farm, Inc....
On October 1, 2020, Monty Equipment Company sold a pecan-harvesting machine to Valco Brothers Farm, Inc. In lieu of a cash payment Valco Brothers Farm gave Arden a 2-year, $144,800, 10% note (a realistic rate of interest for a note of this type). The note required interest to be paid annually on October 1. Monty’s financial statements are prepared on a calendar-year basis. Assuming Valco Brothers Farm fulfills all the terms of the note, prepare the necessary journal entries for...
On October 1, 2017, Sheridan Equipment Company sold a pecan-harvesting machine to Valco Brothers Farm, Inc....
On October 1, 2017, Sheridan Equipment Company sold a pecan-harvesting machine to Valco Brothers Farm, Inc. In lieu of a cash payment Valco Brothers Farm gave Arden a 2-year, $171,200, 10% note (a realistic rate of interest for a note of this type). The note required interest to be paid annually on October 1. Sheridan’s financial statements are prepared on a calendar-year basis. Assuming Valco Brothers Farm fulfills all the terms of the note, prepare the necessary journal entries for...
On October 1, 2017, Martinez Equipment Company sold a pecan-harvesting machine to Valco Brothers Farm, Inc....
On October 1, 2017, Martinez Equipment Company sold a pecan-harvesting machine to Valco Brothers Farm, Inc. In lieu of a cash payment Valco Brothers Farm gave Arden a 2-year, $176,000, 8% note (a realistic rate of interest for a note of this type). The note required interest to be paid annually on October 1. Martinez’s financial statements are prepared on a calendar-year basis. Assuming Valco Brothers Farm fulfills all the terms of the note, prepare the necessary journal entries for...
On October 1, 2017, Blue Spruce Corp., a farm equipment dealer, sold a harvesting machine to...
On October 1, 2017, Blue Spruce Corp., a farm equipment dealer, sold a harvesting machine to Coronado Industries. Instead of a cash payment, Coronado Industries gave Blue a $121,000, two-year, 10% note; 10% is a realistic rate for a note of this type. The note required interest to be paid annually on October 1, beginning October 1, 2018. Blue’s financial statements are prepared on a calendar-year basis. a)Repeat the journal entries under the assumption that Blue Spruce Corp. uses reversing...
Notes Payable at December 31, 2020 consisted of: -Foley Bank- $1900,000, 9% interest rate. Interest is...
Notes Payable at December 31, 2020 consisted of: -Foley Bank- $1900,000, 9% interest rate. Interest is paid on Feb. 1st of each year, principal to be repaid on 2/1/2024. - Northern Bank- 120,000, 8% interest rate, interest is paid on June 25th of each year, principal to be repaid on June 30, 2022. what are journal entries for: 2/1 paid the interest on the loan from Foley Bank 7/1 made interest payment on equipment note to Northern Bank
Impairment of zero-interest notes receivable, GAAP vs. IFRS On December 31, 2020, Firth Company borrowed $62,092...
Impairment of zero-interest notes receivable, GAAP vs. IFRS On December 31, 2020, Firth Company borrowed $62,092 from Paris Bank, signing a 5-year, $100,000 zero-interest note. The note was issued to yield 10% interest. Unfortunately, during 2022, Firth began to experience financial difficulty. As a result, at December 31, 2022, Paris Bank determined that it was probable that it would collect only $75,000 at maturity. The market rate of interest on loans of this nature is now 11%. 1,Instructions: On March...
Impairment of zero-interest notes receivable, GAAP vs. IFRS On December 31, 2020, Firth Company borrowed $62,092...
Impairment of zero-interest notes receivable, GAAP vs. IFRS On December 31, 2020, Firth Company borrowed $62,092 from Paris Bank, signing a 5-year, $100,000 zero-interest note. The note was issued to yield 10% interest. Unfortunately, during 2022, Firth began to experience financial difficulty. As a result, at December 31, 2022, Paris Bank determined that it was probable that it would collect only $75,000 at maturity. The market rate of interest on loans of this nature is now 11%. 1,Instructions: On March...
n December 31, 2017, Jones Builders Incorporated received a note receivable for stadium repairs provided to...
n December 31, 2017, Jones Builders Incorporated received a note receivable for stadium repairs provided to Lambeau Leap Company. The 4 year note had a face value of $400,000. The stated rate on the note was 9%. The market rate, at the time of issuance, for notes of this kind was 12%. Jones Builders correctly calculated the present value of the note to be $363,552.60. Interest on the note is paid annually, beginning December 31, 2018. The face value will...
EXERCISES Explain the time period assumption. (LO 1) E3-1 Chloe Davis has prepared the following list...
EXERCISES Explain the time period assumption. (LO 1) E3-1 Chloe Davis has prepared the following list of statements about the time period assumption. Adjusting entries would not be necessary if a company's life were not divided into artificial time periods. The IRS requires companies to file annual tax returns. Accountants divide the economic life of a business into artificial time periods, but each transaction affects only one of these periods. Accounting time periods are generally a month, a quarter, or...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT