On January 1st, 2021, Crushed and Crooked Ice Makers, Inc. issued a $30,000, five-year note receivable...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
On January 1st, 2021, Crushed and Crooked Ice Makers, Inc. issued a $30,000, five-year note receivable to Coolio Corporation. The stated rate of interest on this note is 6% but the market rate of interest at the time of issuance was 8%. Coolio will make interest payments on the note every December 31st, and Crushed and Crooked Ice Makers, Inc. will amortize any discount (or premium) on the note using the effective-interest method. Determine the fair value of the note Present Value of Principal Add: PV of Interest Fair Value of Note Prepare the amortization table for this note Interest Revenue Amortized Discount Cash Received Date of Issue (1-1-21) End of Year 1 (12-31-21) End of Year 2 (12-31-22) End of Year 3 (12-31-23) End of Year 4 (12-31-24) End of Year 5 (12-31-25) Total Record the January 1st, 2021 journal entry for the issuance of the note Carrying Amount Record the December 31st, 2021 journal entry for the receipt of interest from Coolio Bonus: Assume that Coolio will repay the principal owed on the note when it makes its final interest payment on December 31st, 2025. Record Crushed and Crooked Ice Makers' journal entry for the receipt of the final interest payment plus the repayment of the note's principal from Coolio. On January 1st, 2021, Crushed and Crooked Ice Makers, Inc. issued a $30,000, five-year note receivable to Coolio Corporation. The stated rate of interest on this note is 6% but the market rate of interest at the time of issuance was 8%. Coolio will make interest payments on the note every December 31st, and Crushed and Crooked Ice Makers, Inc. will amortize any discount (or premium) on the note using the effective-interest method. Determine the fair value of the note Present Value of Principal Add: PV of Interest Fair Value of Note Prepare the amortization table for this note Interest Revenue Amortized Discount Cash Received Date of Issue (1-1-21) End of Year 1 (12-31-21) End of Year 2 (12-31-22) End of Year 3 (12-31-23) End of Year 4 (12-31-24) End of Year 5 (12-31-25) Total Record the January 1st, 2021 journal entry for the issuance of the note Carrying Amount Record the December 31st, 2021 journal entry for the receipt of interest from Coolio Bonus: Assume that Coolio will repay the principal owed on the note when it makes its final interest payment on December 31st, 2025. Record Crushed and Crooked Ice Makers' journal entry for the receipt of the final interest payment plus the repayment of the note's principal from Coolio.
Expert Answer:
Answer rating: 100% (QA)
ANSWER Fair Value of the Note PV of Principal 30000 PV of In... View the full answer
Related Book For
Survey of Accounting
ISBN: 978-0078110856
3rd Edition
Authors: Thomas P. Edmonds, Frances M. McNair, Philip R. Olds, Bor Yi
Posted Date:
Students also viewed these accounting questions
-
A partial amortization schedule for a 10-year note payable issued on January 1, 2016, is shown below. a. Using the financial statement model below, record the appropriate amounts for the following...
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
The following additional information is available for the Dr. Ivan and Irene Incisor family from Chapters 1-5. Ivan's grandfather died and left a portfolio of municipal bonds. In 2012, they pay Ivan...
-
Following procedures similar to those for the homogeneous problem (see Section 8.4.1), develop the following stress field for a pressurized hole in an infinite nonhomogeneous medium with moduli...
-
Table 30.12 shows Dynamic Mattress?s year-end 1999 balance sheet, and Table 30.13 shows its income statement for 2000. Work out statements of sources and uses of cash and sources and uses of funds...
-
Use the Loss coefficient-Modulus ( \(\eta-E\) ) chart (Fig. 3.9) to find metals with the highest possible damping. Fig. 3.9 Loss coefficient, 17, at 30C 10 10 Neoprene Butyl rubber Elastomers...
-
Find the = 0.05 critical value for the chi-square distribution with 18 degrees of freedom.
-
During the current year, Ross Corporation purchased a warehouse for $45,000, paid $1,000 dividends, sold land for $7,900, and issued $25,000 of common stock. All of these were cash transactions. Show...
-
Please help me with this question, it is using FIFO method.. thank you CoursHeroTranscribedText Alvis Construction Supply Company has a department that manufactures wood trusses (wood frames used in...
-
Prepare journal entries for the above transactions. Aylmer Industries Inc. (Aylmer) has been in business since 2018. Aylmer has two main business segments. This first segment is the construction of...
-
Comparative advertising is an advertisement designed to Group of answer choices compare the featured brand with another brand, named or implied build primary demand for a product provide the...
-
PR/2 a+bsinx dx 7. Apply differentiation under integral sign to evaluate log absinx sinx 8. Define Gamma function. Apply Beta and Gamma function to evaluate: cos 60.sin* 30= 7 192 9. Find the area...
-
On April 1, 10,000 shares of $5 par common stock were issued at $22, and on April 7, 5,000 shares of $50 par preferred stock were issued at $104. Journalize the entries for April 1 and 7. If an...
-
i. A mobile base station (BS) in an urban environment has a power measurement of 45 W at 285 m. If the propagation follows an inverse 4th power law (Section 3.2.2), what is a reasonable power value,...
-
A professor once suggested the "Big Mac" index was a useful way to calculate the purchasing price parity of currencies around the world.He noticed the following: Cost of a Big Mac Hamburger (BMH)in...
-
Wells Fargo & Company, headquartered in San Francisco, is one of the nation's largest financial institutions. Suppose it reported the following selected accounts (in millions) as of December 31,...
-
Design a CMOS digital circuit that realizes the Boolean function Y bar =A(B+CD)
-
An environmentalist wants to determine if the median amount of potassium (mg/L) in rainwater in Lincoln County, Nebraska, is different from that in the rainwater in Clarendon County, South Carolina....
-
The bookkeeper for Lowell's Country Music Bar went insane and left this incomplete balance sheet. Lowell's working capital is $90,000 and its debt to assets ratio is 40 percent. Required Complete the...
-
John Riley, a certified public accountant, has worked for the past eight years as a payroll clerk for Southeast Industries, a small furniture manufacturing firm in the Northeast. John recently...
-
On August 1, 2012, Woodworks paid Warehouse Rentals $54,000 for a 12-month lease on warehouse space. Required a. Record the deferral and the related December 31, 2012, adjustment for Woodworks in the...
-
It was reported in your department meeting that over the past year your hospital decreased the number of employees by four percent. Last year there were 389 people employed; how many are employed...
-
A physician on your staff performed 44 cardiac catheterizations last month. 34 of those treated were male. What is the ratio of male patients to female patients who had cardiac catheterizations? What...
-
Your beginning salary as an analyst in the HIM department is $14.50 per hour. You are due to receive a 3.4 percent cost-of-living raise in your next paycheck. Your performance evaluation is coming up...
Study smarter with the SolutionInn App