Question
5. Polo Publishers purchased a multi-color offset press with terms of $50,000 down and a noninterest-bearing note requiring payment of $20,000 at the end of
5. Polo Publishers purchased a multi-color offset press with terms of $50,000 down and a noninterest-bearing note requiring payment of $20,000 at the end of each year for five years. The interest rate implicit in the purchase contract is 11%. Polo would record the asset at:
7. Chancellor Ltd. sells an asset with a $1 million fair value to Sophie Inc. Sophie agrees to make six equal payments, one year apart, commencing on the date of sale. The payments include principal and 6% ANNUAL interest. Compute the annual payments.
9. Tamara Inc. factors $600,000 of its accounts receivables without recourse for a finance charge of 5%. The finance company retains an amount equal to 10% of the accounts receivable for possible adjustments. What is the journal entry that Tamara should have?
10. Tamara Inc. factors $600,000 of its accounts receivables with recourse for a finance charge of 3%. The finance company retains an amount equal to 10% of the accounts receivable for possible adjustments. Sun estimates the fair value of the recourse liability at $30,000. What is the journal entry that Tamara should have?
11. Geary Co. assigned $1,600,000 of accounts receivable to Kwik Finance Co. as security for a loan of $1,340,000. Kwik charged a 2% commission on the amount of the loan; the interest rate on the note was 10%. During the first month, Geary collected $440,000 on assigned accounts after deducting $1,520 of discounts and remit the collection to Kwik. Geary accepted returns worth $5,400 and wrote off assigned accounts totaling $11,920. What is the journal entry that Geary should have.
12. What is the journal entry that Geary should make to remit the collection to Kwik.
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