On October 1, 2020, Healy Farm Equipment Corp. sold a harvesting machine to Homestead Industries. Instead of
Question:
On October 1, 2020, Healy Farm Equipment Corp. sold a harvesting machine to Homestead Industries. Instead of a cash payment, Homestead Industries gave Healy Farm Equipment a $150,000, twoyear, 10% note; 10% is a realistic rate for a note of this type. The note required interest to be paid annually on October 1, beginning October 1, 2021. Healy Farm Equipment’s financial statements are prepared on a calendar-year basis.
Instructions
a. Assuming that no reversing entries are used and that Homestead Industries fulfills all the terms of the note, prepare the necessary journal entries for Healy Farm Equipment Corp. for the entire term of the note.
b. Repeat the journal entries under the assumption that Healy Farm Equipment Corp. uses reversing entries.
Financial StatementsFinancial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
Step by Step Answer:
Intermediate Accounting Volume 1
ISBN: 978-1119496496
12th Canadian edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Irene M. Wiecek, Bruce J. McConomy