Sarah and Gabe are considering the following transactions and have asked you to explain the impact of
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Sarah and Gabe are considering the following transactions and have asked you to explain the impact of the transactions on their Statement of Financial Position:
- Purchase a baseball card collection from Gabe’s uncle for $5,000 cash. Gabe feels the cards are worth more than $5,000. There has never been an official appraisal of the collection.
- Secure a home-equity loan of $25,000 to have on hand for various projects and possibly to take a family vacation abroad.
- Trade the pick-up for an SUV at a cost of $40,000. They will use their pick-up truck as a trade-in as a down payment, the current value is estimated at $7,000, and borrow the balance at a projected rate of 5%.
- Also, they anticipate their respective 401(k) accounts increasing in value by 15% this year and have asked if this will have any impact on their financial statements.
Related Book For
Accounting Texts and Cases
ISBN: 978-1259097126
13th edition
Authors: Robert Anthony, David Hawkins, Kenneth Merchant
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