Mikeska Companies purchased equipment for $108,000 from Power-line Manufacturing on January 1, 2012. Mikeska paid $18,000 in
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Provide journal entries in the books of both Mikeska Companies and Power-line Manufacturing for the period 2014–2016 under the following independent scenarios:
1. Power-line accepted $30,000 in cash and old equipment (fully depreciated on Mikeska’s books) with a market value of $12,000 in exchange for the outstanding note.
2. Power-line Manufacturing agreed to receive a total of $86,400 ($72,000 plus $14,400, representing four years’ interest at 5%) on December 31, 2016, in exchange for the outstanding note. (Interpolate for Mikeska’s new effective interest rate.)
3. Power-line Manufacturing decides to waive all interest and defers all principle payments until December 31, 2016.
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Related Book For
Financial Reporting and Analysis
ISBN: 978-0078025679
6th edition
Authors: Flawrence Revsine, Daniel Collins, Bruce, Mittelstaedt, Leon
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