1 answer

Seved Help Holly Springs, Inc. contracted with Coldwater Corporation to have constructed a custom-made lathe. The...

Question:

Seved Help Holly Springs, Inc. contracted with Coldwater Corporation to have constructed a custom-made lathe. The machine was
Seved Help Holly Springs, Inc. contracted with Coldwater Corporation to have constructed a custom-made lathe. The machine was completed and ready for use on January 1, 2021. Holly Springs pald for the lathe by issuing a $250,000 note due in three years. Interest, specified at 2%, was payable annually on December 31 of each year. The cash market price of the lathe was unknown. It was determined by comparison with similar transactions for which 6% was a reasonable rate of interest. Holly Springs uses the effective interest method of amortization. (FV of $1. PV of $1. EVA of $1, PVA of S1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Prepare the journal entry on January 1, 2021, for Holly Springs purchase of the lathe. 2. Prepare an amortization schedule for the three-year term of the note. 3. Prepare the journal entries to record (a) Interest for each of the three years and (b) payment of the note at maturity. Complete this question by entering your answers in the tabs below. Required 1 Required 2 d2 Required 3 Required 3 Prepare the journal entry on January 1, 2021, for Holly Springs' purchase of the lathe. (If no entry is required for a transaction/event select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record for the Holly Springs' purchase on January 1, 2021 Note: Enter debits before credits

Answers

Present Value of Notes Payable = Interest Payment x PVIFA (6%, 3) + Par Value x PVIF (6%, 3)

Here,

Annual Interest Payment = 250,000*2% = $5000

PVIFA (6%, 3) = 2.673 (taken value 3 decimal places)

PVIF (6%, 3) = 0.840 (taken value 3 decimal places)

Present Value of Notes Payable i.e. Cost of Machine = (5000*2.673) + (250,000*0.840) = 13365 + 210000 = 223365

Discount on Notes Payable = 250,000 – 223,365 = 26,635

Transaction #

Date

General Journal

Debit

Credit

1

Jan 1, 2021  

Machine

223,365

Discount on Notes Payable

26,635

     Notes Payable

$250,000

2) Amortization Schedule

Year

Cash Payments (250,000*2%)

Effective Interest (Book Value of Notes Payable * Market Rate)

Increase in Balance (Effective Interest - Cash Interest)

Outstanding balance

223365

1

5000

13402 (223365*6%)

8402

231767

2

5000

13906 (231767*6%)

8906

240673

3

5000

14327 [(240673*6%) – 113 for adjustment)]

9327

250000

3)

Transaction #

General Journal

Debit

Credit

a-1

Interest Expenses

13402

      Discount on Notes Payable

8,402

      Cash Interest Payable

5000

a-2

Interest Expenses

13906

      Discount on Notes Payable

8906

      Cash Interest Payable

5000

a-3

Interest Expenses

14327

      Discount on Notes Payable

9,327

      Cash Interest Payable

5000

B

Notes Payable

250,000

   Cash

250,000

.

Similar Solved Questions

1 answer
10 m 028 Find all possible values of angle that the ball can be thrown by...
10 m 028 Find all possible values of angle that the ball can be thrown by 20 m/s from the girl at A to enter the upper window at B. 20 m/s 20 m...
1 answer
Exhibit, by means of a table, a cryptosystem which satisfies the three properties (mentioned below) of one-time pads but...
Exhibit, by means of a table, a cryptosystem which satisfies the three properties (mentioned below) of one-time pads but does not have perfect secrecy. Properties of one-time pads are, 1. The number of possible keys is greater than or equal to the number of possible plaintexts. 2. The key is selecte...
1 answer
[10] 5. (a) Find Ker(T) and Rng(T), dimensions, bases, and give a geometrical description of each...
[10] 5. (a) Find Ker(T) and Rng(T), dimensions, bases, and give a geometrical description of each if T : R3 + R3, T(x) = Ax, and A 2 4 -1 -1 -2 1/2 4 8 -2...
1 answer
In the circuit shown in the figure, find the current through the 68 ? resistor. a.0.124A...
In the circuit shown in the figure, find the current through the 68 ? resistor. a.0.124A b.0.102A c.0.022A d.0.097A e.8.40A Problem 5 252 68Ω 35 Ω 9 V 12 v...
1 answer
Use four iterations of Romberg integration to estimate π = Jo 22 +1
Use four iterations of Romberg integration to estimate π = Jo 22 +1...
1 answer
X is a Laplace Distribution (Double Exponential Distribution) with mu = beta and b = alpha....
X is a Laplace Distribution (Double Exponential Distribution) with mu = beta and b = alpha. f(x) = where alpha > 0 Derive an Expression for E(|X - E(X)|). (The expected value of the absolute value of X - the mean)....
1 answer
Good evening. i need help with this calculus question. i will thumbs up your answer. [25...
good evening. i need help with this calculus question. i will thumbs up your answer. [25 pts) Let F(x, y, z) = (2xy + 2)i + (4x²y3 + 2yz)j + (5224 + 3y²z2)k and let C be the curve given parametrically by r(t) = (3t+1)i + tºj + 5tk for 0 <t<1. Evaluate the line integral [F. '...
1 answer
% Transmission % Transmission 0000 0000 0000 1000 cm 0OT c. 1:1 mixture of 2-heptanone :...
% Transmission % Transmission 0000 0000 0000 1000 cm 0OT c. 1:1 mixture of 2-heptanone : 2-heptanol 1000 cm 0002 000 000 0OT b. Pure 2-heptanol...
1 answer
The revenue cycle requires regular review. Identify at least two (2) types of misstatements found in...
The revenue cycle requires regular review. Identify at least two (2) types of misstatements found in the revenue process. Next, identify a sound, timely internal control to detect and correct this misstatement...
1 answer
4. It is very common to see the phrase "Kills 99.9% of germsl" on the hand...
4. It is very common to see the phrase "Kills 99.9% of germsl" on the hand sanitizers we buy at the store. Why do you think a hand sanitizer cannot kill 100% of germs on the skin? Think about what is going on when you use an antiseptic on living tissue....
1 answer
The figure shows an arrangement known as a Helmholtz coil. It consists of two circular coaxial...
The figure shows an arrangement known as a Helmholtz coil. It consists of two circular coaxial coils, each of 400 turns and radius R = 130 cm, separated by a distance R = 130 cm. The two coils carry equal currents i = 45 A in the same direction. Find the magnitude of the net magnetic field at P, on ...
1 answer
The K_a of a monoprotic weak acid is 7.53 times 10-3. What is the percent ionization...
The K_a of a monoprotic weak acid is 7.53 times 10-3. What is the percent ionization of a 0.107 M solution of this acid?...
1 answer
When in the absolute value of x equal to the absolute value of negative x
when in the absolute value of x equal to the absolute value of negative x?(always right?) negative sign is inside absolute value barswhen is the absolute value of x equal to negative absolute value?(never?) negative sign is outside absolute value bars...
1 answer
Why must least squares be used to approximate a solution to an overdetermined system?
Why must least squares be used to approximate a solution to an overdetermined system?...
1 answer
Please answer all questions for rate. thank you :) For the following equation: MnO4 (aq) +...
please answer all questions for rate. thank you :) For the following equation: MnO4 (aq) + Ca(s) → MnO2(s) + Ca?*(aq) Standard Reduction Potential values: Mno. MnO2 = 1.68 V Ca? / Ca = -2.76 V (1) Write balanced half-reaction equations for oxidation and reduction (2) Write the balanced equa...
1 answer
In a scene from a classic cartoon, a hungry coyote is chasing a roadrunner, as shown...
In a scene from a classic cartoon, a hungry coyote is chasing a roadrunner, as shown in the figure below. To aid in his quest, he has donned a pair of ACME brand rocket-propelled roller skates. The skates accelerate the coyote at 17.0 m/s2 in the horizontal direction. The roadrunner is moving at a c...
1 answer
Bristol Car Service offers airport service in a mid-size city. Bristol charges $36 per trip to...
Bristol Car Service offers airport service in a mid-size city. Bristol charges $36 per trip to or from the airport. The variable cost for a trip totals $28, for fuel, driver, and so on. The monthly fixed cost for Bristol Rainbow Tours is $2,160. Required: a. How many trips must Bristol sell every mo...
1 answer
Solve by the elimination method. Also determine whether the system is consistent or inconsistent and whether...
Solve by the elimination method. Also determine whether the system is consistent or inconsistent and whether the equations are dependent or independent. 2x-10y -8 3x-15y 12 Select the correct choice below and, if necessary, fill in the answer box to complete your choice. O A. There is only one solut...