Question
On January 1, 2019, Worthylake Company sold used machinery to Brown Company, accepting a $30,000, non-interest-bearing note maturing on January 1, 2021. Worthylake carried the
On January 1, 2019, Worthylake Company sold used machinery to Brown Company, accepting a $30,000, non-interest-bearing note maturing on January 1, 2021. Worthylake carried the machinery on its books at a cost of $22,000 and a current book value of $15,000. Neither the fair value of the machinery nor the note was determinable at the time of sale; however, Browns incremental borrowing rate was 12%.
Required:
| Prepare the journal entries on Worthylakes books to record: |
| 1. | sale of the machinery |
| 2. | related adjusting entries on December 31, 2019, and 2020 |
| 3. | payment of the note by Brown on January 1, 2021 |
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The Mcgraw Hill 36 Hour Course In Finance For Non Financial Managers
Authors: Robert Cooke
2nd Edition
0071425462, 978-0071425469
