ACT3391HomeworkFall2009Solutions17,18,19

ACT3391HomeworkFall2009Solutions17,18,19 - HOMEWORK Fall...

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HOMEWORK - Fall 2009 – Chapters 1 through 7 17. (3 points) On December 31, 2008, B Company sold some inventory to D Company in exchange for a $7,000,000, 10% note receivable. The note principal will be collected in full on December 31, 2012. Interest will be collected every December 31 starting December 31, 2009. Assume the appropriate market rate of interest at the time is 15%. The cost of the inventory sold was $3,250,000. Prepare the journal entries that B should make on 12-31-08, 12-31-09, 12-31-10, 12-31- 11, and 12-31-12. PV of principal: 0.57175 factor calculator $4,002,273 PV of interest: 2.85498 factor calculator $1,998,485 $6,000,758 Cash Interest Received Interest Revenue Discount Amortized Carrying Amt. of NR Date of issue (CV of NR x 15%) $6,000,758 End of year 1 $700,000 $ 900,114 $200,114 $6,200,872 End of year 2 $700,000 $ 930,131 $230,131 $6,431,003 End of year 3 $700,000 $ 964,650 $264,650 $6,695,653 End of year 4 $700,000 $1,004,347 $304,347 $7,000,000 12-31-08 Notes receivable $7,000,000 Sales revenue $6,000,758
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ACT3391HomeworkFall2009Solutions17,18,19 - HOMEWORK Fall...

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