On January 1, 2007 Worthylake Company sold used machinery to Brown Company, accepting a $25,000 non-interest-bearing note
Question:
On January 1, 2007 Worthylake Company sold used machinery to Brown Company, accepting a $25,000 non-interest-bearing note maturing on January 1, 2009. Worthylake Company carried the machinery on its books at a cost of $22,000 and a current book value of $15,000. Neither the fair value of the machinery nor the note was determinable at the time of sale; however, Brown’s incremental borrowing rate was 12%.
Required
Prepare the journal entries on Worthylake Company’s books to record:
1. The sale of the machinery
2. The related adjusting entries on December 31, 2007 and 2008
3. The payment of the note by Brown Company on January 1, 2009
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Intermediate Accounting
ISBN: 978-0324300987
10th Edition
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones
Question Posted: