On September 30, 2021, Halifax Corporation sold merchandise to Vancouver Inc., accepting a 4%, 3-year promissory...
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On September 30, 2021, Halifax Corporation sold merchandise to Vancouver Inc., accepting a 4%, 3-year promissory note of $259,900 in exchange. Interest is payable annually on September 30, starting September 30, 2022. Halifax Corporation normally pays 4% interest to borrow funds. However, Vancouver Inc. normally pays 5% to borrow funds. The product sold is carried on Halifax Corporation's books at a cost of $124,300. Halifax Corporation has a year end of September 30 and follows IFRS. Required: 1. Calculate the amount at which the product was sold to Vancouver Inc. (2 marks) 2. Prepare an amortization schedule for this note. (2 marks) 3. Prepare the journal entries to record this transaction in the books of Halifax Corporation on September 30, 2021. (1.5 marks) 4. Prepare the journal entry required for this note by Halifax Corporation in 2022. (1.5 marks) On September 30, 2021, Halifax Corporation sold merchandise to Vancouver Inc., accepting a 4%, 3-year promissory note of $259,900 in exchange. Interest is payable annually on September 30, starting September 30, 2022. Halifax Corporation normally pays 4% interest to borrow funds. However, Vancouver Inc. normally pays 5% to borrow funds. The product sold is carried on Halifax Corporation's books at a cost of $124,300. Halifax Corporation has a year end of September 30 and follows IFRS. Required: 1. Calculate the amount at which the product was sold to Vancouver Inc. (2 marks) 2. Prepare an amortization schedule for this note. (2 marks) 3. Prepare the journal entries to record this transaction in the books of Halifax Corporation on September 30, 2021. (1.5 marks) 4. Prepare the journal entry required for this note by Halifax Corporation in 2022. (1.5 marks)
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1 Promissory note is a debt instrument which will pay bondholders periodic coupon interest until bon... View the full answer
Related Book For
Financial Accounting
ISBN: 978-1259103285
5th Canadian edition
Authors: Robert Libby, Patricia Libby, Daniel Short, George Kanaan, M
Posted Date:
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