Question

On January 1, 2021, the Montgomery Company agreed to purchase a building by making six payments....

On January 1, 2021, the Montgomery Company agreed to purchase a building by making six payments. The first three are to be $27,000 each, and will be paid on December 31, 2021, 2022, and 2023. The last three are to be $42,000 each and will be paid on December 31, 2024, 2025, and 2026. Montgomery borrowed other money at a 10% annual rate. (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. At what amount should Montgomery record the note payable and corresponding cost of the building on January 1, 2021?
2. How much interest expense on this note will Montgomery recognize in 2021?
(For all requirements, Round your final answers to nearest whole dollar amount.)

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

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 January 1, 2021, Wright Transport sold four school buses to the Elmira School District. In...
On January 1, 2021, Wright Transport sold four school buses to the Elmira School District. In exchange for the buses, Wright received a note requiring payment of $522,000 by Elmira on December 31, 2023. The effective interest rate is 5%. (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. How much sales revenue would Wright recognize on January 1, 2021, for...
On January 1, 2021, Wright Transport sold four school buses to the Elmira School District. In...
On January 1, 2021, Wright Transport sold four school buses to the Elmira School District. In exchange for the buses, Wright received a note requiring payment of $526,000 by Elmira on December 31, 2023. The effective interest rate is 7%. (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. How much sales revenue would Wright recognize on January 1, 2021, for...
On January 1, 2021, Wright Transport sold four school buses to the Elmira School District. In...
On January 1, 2021, Wright Transport sold four school buses to the Elmira School District. In exchange for the buses, Wright received a note requiring payment of $523,000 by Elmira on December 31, 2023. The effective interest rate is 6%. (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. How much sales revenue would Wright recognize on January 1, 2021, for...
On January 1, 2021, Byner Company purchased a used tractor. Byner paid $7,000 down and signed...
On January 1, 2021, Byner Company purchased a used tractor. Byner paid $7,000 down and signed a noninterest-bearing note requiring $40,000 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. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of...
On January 1, 2021, Byner Company purchased a used tractor. Byner paid $6,000 down and signed...
On January 1, 2021, Byner Company purchased a used tractor. Byner paid $6,000 down and signed a noninterest-bearing note requiring $38,000 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. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of...
n January 1, 2021, Byner Company purchased a used tractor. Byner paid $6,000 down and signed...
n January 1, 2021, Byner Company purchased a used tractor. Byner paid $6,000 down and signed a noninterest-bearing note requiring $43,000 to be paid on December 31, 2023. The fair value of the tractor is not determinable. An interest rate of 12% properly reflects the time value of money for this type of loan agreement. The company’s fiscal year-end is December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of...
FinanceCo lent $8.9 million to Corbin Construction on January 1, 2021, to construct a playground. Corbin...
FinanceCo lent $8.9 million to Corbin Construction on January 1, 2021, to construct a playground. Corbin signed a three-year, 4% installment note to be paid in three equal payments at the end of each year. (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 FinanceCo’s lending the funds on January 1, 2021. 2. Prepare an amortization...
At January 1, 2021, NCI Industries, Inc. was indebted to First Federal Bank under a $257,000,...
At January 1, 2021, NCI Industries, Inc. was indebted to First Federal Bank under a $257,000, 12% unsecured note. The note was signed January 1, 2014, and was due December 31, 2022. Annual interest was last paid on December 31, 2016. NCI was experiencing severe financial difficulties and negotiated a restructuring of the terms of the debt agreement. First Federal agreed to reduce last year’s interest and the remaining two years’ interest payments to $16,123 each and delay all payments...
Federated Fabrications leased a tooling machine on January 1, 2021, for a three-year period ending December...
Federated Fabrications leased a tooling machine on January 1, 2021, for a three-year period ending December 31, 2023. The lease agreement specified annual payments of $32,000 beginning with the first payment at the beginning of the lease, and each December 31 through 2022. The company had the option to purchase the machine on December 30, 2023, for $41,000 when its fair value was expected to be $56,000, a sufficient difference that exercise seems reasonably certain. The machine's estimated useful life...
On January 1, 2021, Bishop Company issued 8% bonds dated January 1, 2021, with a face...
On January 1, 2021, Bishop Company issued 8% bonds dated January 1, 2021, with a face amount of $20.7 million. The bonds mature in 2030 (10 years). For bonds of similar risk and maturity, the market yield is 10%. Interest is paid semiannually on June 30 and December 31. (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. Round your intermediate calculations to...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT