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andreev551 [17]
3 years ago
13

On July 1, 2021, Markwell Company acquired equipment. Markwell paid $185,000 in cash on July 1, 2021, and signed a $740,000 noni

nterest-bearing note for the remaining balance which is due on July 1, 2022. An interest rate of 6% reflects the time value of money for this type of loan agreement.
Which of the following should be included in the journal entry on July 1, 2021?

a. Credit: Notes payable, $698,116.
b. Debit: Equipment, $925,000.
c. Debit: Discount on notes payable, $41,884.
d. Credit: Notes payable, $698,116 and Debit: Discount on notes payable, $41,884.
Business
1 answer:
Alenkasestr [34]3 years ago
7 0

Answer:

c. Debit: Discount on notes payable, $41,884.

Explanation:

The journal entry is shown below:

Equipment    $883,116  

Discount on Notes payable $41,884  ($740,000 - $698,116)

        To Notes payable       $740,000  

        To Cash                       $185,000

(Being the amount paid in cash and note payable is recorded)

Working note

= Note payable amount × PVF factor at 6% for one year

= $740,000 × 0.94340

= $698,116

For recording this we debited the equipment as it increased the assets and discount is always debited while the note payable and cash is credited as it increased the liabilities and reduced the assets

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mina [271]

Answer:

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Therefore, the beginning balance of equipment in 2023 (or, the ending balance in 2022) = \frac{30,000}{0.25}

The beginning balance of equipment in 2023 = $120,000

Using the same approach,

The beginning balance of equipment in 2022 (Or, the purchasing price) =

Depreciation = Purchase price x 25%

since the purchase price and depreciation are unknown, therefore, we use,

Ending value in 2022 = Purchase price x (100% - 25%) (Depreciation rate is 100%)

or, $120,000 = Purchase price x 75%

or, Purchase price = $120,000/0.75 = $160,000

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Purchase price = $160,000

Book value after 4 years (As of December 2025, the equipment was purchased in January 2022) = $82,700

Therefore, accumulated depreciation = $160,000 - 82,700 = $77,300 for 4 years.

As the straight-line method depreciation is same for each year,

the depreciation for the first year = \frac{77,300}{4} = $19,325

According to the straight-line method,

Depreciation = \frac{Purchase price - Residual value}{Useful life}

or, $19,325 = \frac{160,000 - Residual Value}{8}

or, $19,325 x 8 = $160,000 - Residual value

or, Residual Value = $160,000 - $154,600

Hence, Residual value = $5,400

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A registered rep is in the process of being hired with a new firm. The registered rep isn't sure whether it is required that he
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What is the typical relationship between interest rates on​ 6-month treasury​ bills, 10-year treasury​ notes, and baa corporate​
Y_Kistochka [10]

What is the typical relationship between interest rates on​ 6-month treasury​ bills, 10-year treasury​ notes, and baa corporate​ bonds? They tend to move together over time with the corporate bond having the highest rate of interest. A treasury note is issued by the US treasury as currency. A treasury bill is a short-dated government security with no interested by is given discounted. A Baa corporate bond is a medium-grade obligations and are considered investment eligible.

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If a CobbDouglas production function has alpha​ = 0.34 and beta​ = 0.42, then a​ 1% increase in inputs results in a​ ________ ch
vampirchik [111]

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We write this in terms of growth rate

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