Question

On January 1, 2020, Alvin Corp. sold property to Marvin Ltd., for which Alvin had originally...

On January 1, 2020, Alvin Corp. sold property to Marvin Ltd., for which Alvin had originally paid $ 570,000. There was no established exchange price for this property. Marvin gave Alvin a $ 900,000, zero-interest-bearing note, payable in three equal annual instalments of $ 300,000, with the first payment due December 31, 2020. The note also has no ready market. The market rate of interest for a note of this type is 10%.

To the nearest dollar, and using the effective-interest method, prepare the journal entries for Marvin Ltd. for 2020

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, 2007, Garner Company sold property to Agler Company which originally cost Garner $760,000....
On January 1, 2007, Garner Company sold property to Agler Company which originally cost Garner $760,000. There was no established exchange price for this property. Agler gave Garner a $1,200,000 zero-interest-bearing note payable in three equal annual installments of $400,000 with the first payment due December 31, 2007. The note has no ready market. The prevailing rate of interest for a note of this type is 10%. The present value of a $1,200,000 note payable in three equal annual installments...
On January 1, 2004, Glenn Company sold property to Jefrey Company. There was no established exchange...
On January 1, 2004, Glenn Company sold property to Jefrey Company. There was no established exchange price for the property, and Jefrey gave Glenn a $1,000,000 zero-interest-bearing note payable in 5 equal annual installments of $200,000, with the first payment due December 31, 2004. The fair value of the land was $727,000 on January 1, 2004. Jefrey is uncertain as to the prevailing rate of interest for a note of this type. What should be the balance of the Discount...
On January 1, 2020, Flounder Corporation sold a building that cost $254,700 and that had accumulated...
On January 1, 2020, Flounder Corporation sold a building that cost $254,700 and that had accumulated depreciation of $105,950 on the date of sale. Flounder received as consideration a $244,700 non-interest-bearing note due on January 1, 2023. There was no established exchange price for the building, and the note had no ready market. The prevailing rate of interest for a note of this type on January 1, 2020, was 11%. At what amount should the gain from the sale of...
On January 1, 2020, Cullumber Corporation sold a building that cost $251,060 and that had accumulated...
On January 1, 2020, Cullumber Corporation sold a building that cost $251,060 and that had accumulated depreciation of $109,510 on the date of sale. Cullumber received as consideration a $241,060 non-interest-bearing note due on January 1, 2023. There was no established exchange price for the building, and the note had no ready market. The prevailing rate of interest for a note of this type on January 1, 2020, was 9%. At what amount should the gain from the sale of...
On January 1, 2017, Blue Corporation sold a building that cost $254,700 and that had accumulated...
On January 1, 2017, Blue Corporation sold a building that cost $254,700 and that had accumulated depreciation of $105,950 on the date of sale. Blue received as consideration a $244,700 non-interest-bearing note due on January 1, 2020. There was no established exchange price for the building, and the note had no ready market. The prevailing rate of interest for a note of this type on January 1, 2017, was 9%. At what amount should the gain from the sale of...
Presented below are two independent situations: (a) On January 1, 2020, Bridgeport Inc. purchased land that...
Presented below are two independent situations: (a) On January 1, 2020, Bridgeport Inc. purchased land that had an assessed value of $316,000 at the time of purchase. A $518,000, zero-interest-bearing note due January 1, 2023, was given in exchange. There was no established exchange price for the land, nor a ready fair value for the note. The interest rate charged on a note of this type is 12%. Determine at what amount the land should be recorded at January 1,...
Presented below are two independent situations: (a) On January 1, 2020, Sweet Inc. purchased land that...
Presented below are two independent situations: (a) On January 1, 2020, Sweet Inc. purchased land that had an assessed value of $367,000 at the time of purchase. A $550,000, zero-interest-bearing note due January 1, 2023, was given in exchange. There was no established exchange price for the land, nor a ready fair value for the note. The interest rate charged on a note of this type is 12%. Determine at what amount the land should be recorded at January 1,...
Savannah Corp. sold property in exchange for a six-year note that has a maturity value of...
Savannah Corp. sold property in exchange for a six-year note that has a maturity value of $40,250 and no stated interest rate. The property originally cost Savannah $29,000. Assuming that a market interest rate of 9% is known, prepare the journal entry to record the sale of this property. In this case, the proceeds from the sale are equal to the present value of the note.
Presented below are two independent situations: (a) On January 1, 2017, Bridgeport Inc. purchased land that...
Presented below are two independent situations: (a) On January 1, 2017, Bridgeport Inc. purchased land that had an assessed value of $383,000 at the time of purchase. A $508,000, zero-interest-bearing note due January 1, 2020, was given in exchange. There was no established exchange price for the land, nor a ready fair value for the note. The interest rate charged on a note of this type is 12%. Determine at what amount the land should be recorded at January 1,...
On January 1, 2020, Flounder Company makes the two following acquisitions. 1. Purchases land having a...
On January 1, 2020, Flounder Company makes the two following acquisitions. 1. Purchases land having a fair value of $220,000 by issuing a 4-year, zero-interest-bearing promissory note in the face amount of $333,975. 2. Purchases equipment by issuing a 7%, 8-year promissory note having a maturity value of $340,000 (interest payable annually). The company has to pay 11% interest for funds from its bank. (a) Record the two journal entries that should be recorded by Flounder Company for the two...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT