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Bess [88]
3 years ago
14

On January 1, 2020, Carter Company makes the two following acquisitions. 1. Purchases land having a fair value of $200,000 by is

suing a 5-year, zero-interest-bearing promissory note in the face amount of $337,012. 2. Purchases equipment by issuing a 6%, 8-year promissory note having a maturity value of $250,000 (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 Carter Company for the two purchases on January 1, 2020. (b) Record the interest at the end of the first year on both notes using the effective-interest method.
Business
1 answer:
viktelen [127]3 years ago
3 0

Answer:

PART A.

1. January 1, 2020

Account Titles and Explanation Debit Credit

Land 200,000

Discount on Notes Payable 137,012

Notes Payable 337,012

2. January 1, 2020

Account Titles and Explanation Debit Credit

Equipment 185,673

Discount on Notes Payable 64,327

Notes Payable 250,000

Solution:

A. 2. Computation of the discount on notes payable:

Maturity value $250,000

Present value of $250,000 due in 8 years at 11% = $250,000 x 0.43393 = $108,483

Present value of $15,000 payable annually for 8 years at 11% annually = $15,000 x 5.14612

= 77,192

Present value of the note (185,675)

Discount $64,325.

PART B

1. December 31, 2020

Account Titles and Explanation Debit Credit

Interest Expense 22,000

Discount on Notes Payable 22,000

2. December 31, 2020

Account Titles and Explanation Debit Credit

Interest Expense 20,424.08

Discount on Notes Payable 5,424.08

Interest Payable 15,000

Solution:

(b) 1. Discount on Notes Payable = ($200,000 x 11%) = $22,000

(b) 2. Interest Expense = ($185,675 x 11%) = $20,424

Interest Payable = ($250,000 x 6%) = $15,000

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irina1246 [14]

Answer:

a). I would adopt the increase in market share in the suburbs by 15 % since the number of final suburbs dwellers who will use my product is (0.0805 x) which is  greater than final city dwellers' (0.075 x)

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Explanation:

a). We can make the following expressions;

Total number of both city dwellers and suburb dwellers=x

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Total number of city dwellers who use your product initially=(20/100)×0.3 x=0.06 x

Total number of suburb dwellers who use your product initially=(10/100)×0.7 x=0.07 x

If we increase the market share in the suburbs by 15%

Number of suburb dwellers=0.07 x+(15/100)×0.07 x

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If we increase market share in the city by 25%

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I would adopt the increase in market share in the suburbs by 15 % since the number of final suburbs dwellers who will use my product is (0.0805 x) which is  greater than final city dwellers' (0.075 x)

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The total percentage of people who are city dwellers who own your product before the new sales drive=46.15%

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During the year, Belyk Paving Co. had sales of $2,275,000. Cost of goods sold, administrative and selling expenses, and deprecia
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Answer:

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Answer:

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Please refer to the attached file for calculation.

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