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Carla Vista Engineering Corporation purchased conveyor equipment with a list price of $54,700. Three independent cases that are a related to the equipment follow. Assume that the equipment purchases are recorded gross. 1. Geddes paid cash for the equipment 25 days after the purchase, along with 5% GST (recoverable) and provincial sales tax of $3,829, both based on the purchase price. The vendor's credit terms were 3/10, n/30. 2. Geddes traded in equipment with a book value of $2,100 (initial cost $39,800) and paid $40,700 in cash one month after the purchase. The old equipment could have been sold for $12,500 at the date of trade but was accepted for a trade-in allowance of $14,000 on the new equipment. 3. Geddes gave the vendor a $9,800 cash down payment and a 8% note payable with blended principal and interest payments of $22.450 each, due at the end of each of the next two years. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1. (a) Prepare the general journal entries to record the acquisition and the subsequent payment, including any notes payable, in each of the three independent cases above. For item 3, use a table, financial calculator, or Excel. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter for the amounts. Round factor values to 5 decimal places, eg. 1.25124 and final answers to decimal places, eg. 5,275.) Account Titles and Explanation Debit Credit 1. (To record purchase of equipment on credit.) (To record payment to the vendor.) 2 (To record exchange of equipment.) (To record exchange of equipment.) (To record payment to the vendor.) 3. (To record purchase of equipment on credit.) First Payment on Note (To record payment to the vendor.) Second Payment on Note (To record payment to the vendor.) On January 1, 2020, Whispering Winds Limited paid $575,560.90 for 12% bonds with a maturity value of $535,000. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2020, and mature on January 1, 2025, with interest receivable on December 31 of each year. Whispering Winds applies ASPE using the effective interest method, and has a December 31 year end. Assume that Whispering Winds hopes to make a gain on the bonds as interest rates are expected to fall. Whispering Winds accounts for the bonds at fair value with changes in value taken to net income, and separately recognizes and reports interest income. The fair value of the bonds at December 31 of each year end is as follows: 2020 $571,600.00 2021 $551,050.00 2022 $548,910.00 2023 $542,490.00 2024 $535,000.00 Your answer is correct. Prepare the journal entry at the date of the bond purchase. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter for the amounts. Round answers to 2 decimal places, e.g. 52.75.) Account Titles and Explanation Debit Credit FV-NI Investments 575560.90 Cash 575560.90 e Textbook and Media List of Accounts Your answer is partially correct. Prepare the journal entries to record interest income and interest received and recognition of fair value at December 31, 2020, 2021, and 2022. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter for the amounts. Round answers to 2 decimal places, e.g. 52.75.) ate Account Titles and Explanation Debit Credit 2020 Cash 64200.00 Interest Income 6643.91 FV-NI Investments 57556.09 (To record interest collected)
