Ignore inc ome tax es om it the sign in your re sponse

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: y ears . Ignore inc ome tax es . (Om it the "$" sign in your re sponse .) The c ombined net inc ome of the nex t five y ears will be unde rsta te d by $ 36,000 . Learning Objective: B-05 Com pute the pres ent values of future cas h flows . W orksheet Learning Objective: B-06 Dis cus s accounting applications of the concept of pres ent value. Us e Table PV-1 (in Ex hibit B-7) and Table PV-2 (in Ex hibit B-9) On Dec ember 31, Ric hland Farms s old a trac t of land, whic h had c os t $930,000, to Sk y line Developers in ex c hange for $150,000 c as h and a five-y ear, 4 perc ent note rec eivable for $900,000. Interes t on the note is pay able annually , and the princ ipal amount is due in five y ears . The ac c ountant for Ric hland Farms did not notic e the unrealis tic ally low interes t rate on the note and made the following entry on Dec ember 31 to rec ord this s ale. General Journal Cas h Notes Rec eivable Land Gain on Sale of Land Sold land to Sk y line Developers in ex c hange for c as h and five-y ear note with interes t d...
View Full Document

Ask a homework question - tutors are online