TBTF Incorporated rents commercial real state to locally based businesses. TBTF purchased a large office complex on January 2, 2022. In exchange for the real estate, TBTF issued a noninterest bearing note to the seller. This note will be paid in equal instalments that include both principal and interest at the end of each calendar year. Other information pertaining to the purchase of the real estate follows: Annual instalment payment amount Market rate of borrowing for TBTF Number of years note will be outstanding Portion of the purchase price to be allocated to land Portion of the purchase price to be allocated to land improvements $ 253,134 8% 9 24% 14% TBTF has a year end date of December 31. Required: Prepare the journal entries required by TBTF to account for the note on each of the following dates: January 2, 2022 December 31, 2024

TBTF Incorporated rents commercial real state to locally based businesses. TBTF purchased a large office complex on January 2, 2022. In exchange for the real estate, TBTF issued a noninterest bearing note to the seller. This note will be paid in equal instalments that include both principal and interest at the end of each calendar year. Other information pertaining to the purchase of the real estate follows: Annual instalment payment amount Market rate of borrowing for TBTF Number of years note will be outstanding Portion of the purchase price to be allocated to land Portion of the purchase price to be allocated to land improvements $ 253,134 8% 9 24% 14% TBTF has a year end date of December 31. Required: Prepare the journal entries required by TBTF to account for the note on each of the following dates: January 2, 2022 December 31, 2024

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter12: Current Liabilities

Section: Chapter Questions

Problem 9PB: Pickles R Us is a pickle farm located in the Northeast. The following transactions take place: A. On...

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Pickles R Us is a pickle farm located in the Northeast. The following transactions take place: A. On November 6, Pickles borrows $820,000 from a bank to cover the initial cost of expansion. Terms of the loan are payment due in six months from November 6, and annual interest rate of 3%. B. On December 12, Pickles borrows an additional $200,000 with payment due in three months from December 12, and an annual interest rate of 10%. C. Pickles pays its accounts in full on March 12, for the December 12 loan, and on May 6 for the November 6 loan. Record the journal entries to recognize the initial borrowings, and the two payments for Pickles.
On January 1, 2018, King Inc. borrowed $150,000 and signed a 5-year, note payable with a 10% interest rate. Each annual payment is in the amount of $39,569 and payment is due each Dec. 31. What is the journal entry on Jan. 1 to record the cash received and on Dec. 31 to record the annual payment? (You will need to prepare the first row in the amortization table to determine the amounts.)
Spath Company borrows 75,000 by issuing a 4-year, noninterest-bearing note to a customer on January 1, 2019. In addition, Spath agrees to sell inventory to the customer at reduced prices over a 5-year period. Spaths incremental borrowing rate is 12%. The customer agrees to purchase an equal amount of inventory each year over the 5-year period so that a straight-line method of revenue recognition is appropriate. Required: Prepare the journal entries on Spaths books for 2019 and 2020. (Round answers to 2 decimal places.)
On January 1, 2018, Laramie Inc. acquired land for $6.2 million. Laramie paid $1.2 million in cash and signed a 6% note requiring the company to pay the remaining $5 million plus interest on December 31, 2019. An interest rate of 6% properly reflects the time value of money for this type of loan agreement. For what amount should Laramie record the purchase of land?
Zephyr Company is provided a grant by a foreign government for the purpose of acquiring land for a building site. The grant is a zero-interest loan for 5 years evidenced by a promissory note. The loan was granted on January 1, 2021 for 8,000,000. The market rate of interest is 6%. The present value of 1 for five periods at 6% is .7473. Required: Prepare journal entries for 2021 and 2022.
DBC Company has received a confirmation letter from the First National Bank of Miami (FNBM) about a line of credit for $12,000,000 on January 2, 2020. According to the terms of this short-term loan, DBC Company will be charged the following: A. ABC will be charged for 50 basis points interest (on an annual basis) for any unused amount of credit from the commencement of this agreement. B. Upon usage of any funds, the interest charge will be Prime rate plus 75 basis points. Prime rate at the commencement of this loan on January 2, 2020, was 5.25%. C. The following events took place in 2020: 1) On February 1, 2020; DBC Co., used $4,000,000 against its line of credit for its working capital purposes. 2) On May 1, 2020; DBC Co., used an additional $2,400,000 to purchase fixed assets. 3) On June 1, 2020, upon the meeting of F.O.M.C., the Fed announced its "Quantitative Easiness" policy and reduced the discount rate by 0.50 basis points. Immediately FNBM bank reflected the same reduction to…
On January 1, 2019, Q Co. contracted for the construction of a building for 20,000,000 on land that it had previously purchased. The building was completed on December 31, 2019. The following payments were made to the contractor: Payment date AmountJanuary 1. 2,000,000March 1. 6,000,000August 30. 10,000,000December 1. 2,000,000 The following represents the borrowings of Q Co. as of December 31, 2019:• 10%, 7,000,000, 4-year note dated January 1, 2019 with simple interest payable annually, specifically borrowed to finance the construction project. Interest income earned on the temporary investment of the proceeds is 120,000.• 10%, 10,000,000, 10-year note dated January 1, 2019 with interest payable annually.•12.5%, 15,000,000, 10-year note dated December 31, 2018 with interest payable annually. The building is estimated to have useful life of 20 years and a residual value of 1,482,500. The Building is…
FinanceCo lent $8 million to Corbin Construction on January 1, 2021, to construct a playground. Corbin signed a three-year, 6% installment note to be paid in three equal payments at the end of each year.Required:1. Prepare the journal entry for FinanceCo’s lending the funds on January 1, 2021.2. Prepare an amortization schedule for the three-year term of the installment note.3. Prepare the journal entry for the first installment payment on December 31, 2021.4. Prepare the journal entry for the third installment payment on December 31, 2023.
Carla Vista Company issues a 8%, 7-year mortgage note on January 1, 2022, to obtain financing for new equipment. Land is used as collateral for the note. The terms provide for semi-annual installment payments of $46,900. What are the cash proceeds received from the issuance of the note?
On January 1, 2021, Dreamlover Corporation purchased equipment from Daydream Company for P3,600,000. Term of payments includes issuing a 5-year noninterest-bearing note payable equally every end of the year. The effective interest rate is 15%. The entity used 2 decimal places for the PVF. Requirements: How much is the initial cost of the equipment?
To attract retailers to its shopping center, the Marketplace Mall will lend money to tenants underformal contracts, provided that they use it to renovate their store space. On November 1, 2014, thecompany loaned $100,000 to a new tenant on a one-year note with a stated annual interest rate of9 percent. Interest is to be received by Marketplace Mall on April 30, 2015, and at maturity onOctober 31, 2015.Required:Prepare journal entries that Marketplace Mall would record related to this note on the following dates: ( a ) November 1, 2014; ( b ) December 31, 2014 (Marketplace Mall’s fiscal year-end);( c ) April 30, 2015; and ( d ) October 31, 2015.
On January 1, 2022, Bryan Company received from the government a P5,000,000 three-year, zero-interest loan evidenced by a promissory note. The prevailing rate of interest for a loan of this type is 10%. The present value of 1 at 10% for three periods is 0.751. 1. What is included in the journal entry to record the loan and grant? A. Debit discount on note payable, P1,245,000 B. Credit note payable, P5,000,000 C. Credit deferred grant income , P1,245,000 D. All of these are included in the journal entry 2. What is the grant income for 2022? А. 1,245,000 В. 415,000 C. 375,500 D. Zero