Question 1 of 3 -78 III View Policies Current Attempt in Progress On June 1, 2020, Concord Corporation approached Silverman Corporation about buying a parcel of undeveloped land. Silverman was asking $ 242,000 for the land and Concord saw that there was some flexibility in the asking price. Concord did not have enough money to make a cash offer to Silverman and proposed to give, in return for the land, a $ 305,000, five-year promissory note that bears interest at the rate of 4%. The interest is to be paid annually to Silverman Corporation on June 1 of each of the next five years. Silverman insisted that the note taken in return become a mortgage note. Silverman accepted the amended offer, and Concord signed a mortgage note for $ 305,000 due June 1, 2025. Concord would have had to pay 10% at its local bank if it were to borrow the cash for the land purchase. Silverman, on the other hand, could borrow the funds at 9%. Both Concord and Silverman have calendar year ends. 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. Using (1) factor tables, (2) a financial calculator, or (3) Excel function PV, calculate the purchase price of the land and prepare an effective interest amortization table for the term of the mortgage note payable that is given in the exchange. (Hint: Refer to Chapter 3 for tips on calculating.) (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimal places, e.g. 5,275.) Purchase price of the land $ 235,629 Mortgage Note Payable - Interest Amortization Note Mortgage Note Payable - Interest Amortization Note Carrying Amc Date Cash Paid Interest Expense Discount Amortized June 1 2020 $ June 1 2021 $ 12,200 GA 23,563 $ 11,363 June 12,200 24,699 12,499 1 2022 June 1 2023 12,200 25,949 13,749 2 June 1 2024 12,200 27,324 15,124 June 1 2025 317,200 28,836 16,636 Mortgage Note Payable - Interest Amortization Note Carrying Amount Cash Paid Interest Expense Discount Amortized $ 235,629 $ 12,200 $ 23,563 $ 11.363 246,991 12,200 24,699 12,499 259,491 12,200 25,949 13,749 273,240 12,200 27,324 15,124 288,364 317,200 28,836 16,636 0 $ 130,371 $ 69,371 $ S 130,371 $ 69,371 eTextbook and Media List of Accounts Prepare the journal entry for the purchase of the land. (Round answers to O decimal places, e.g. 5,275. 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 O for the amounts.) Date Account Titles and Explanation Debit Credit June 1, 2020 Land 235,629 Notes Payable 235,629 e Textbook and Media Prepare any adjusting entry that is required at the end of the fiscal year and the first payment made on June 1, 2021, assuming no reversing entries are used. (Round answers to 0 decimal places, e.g. 5,275. 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 O for the amounts.) Date Account Titles and Explanation Debit Credit Dec. 31, 2020 Interest Expense 13,745 Interest Payable 7,117 Notes Payable 6,628 June 1, 2021 Interest Expense 9,818 Interest Payable 7.117 Cash 12,200 Notes Payable 4,735 e Textbook and Media Assume that Silverman had insisted on obtaining an instalment note from Concord instead of a mortgage note. Using (1) factor tables, (2) a financial calculator, or (3) Excel function PMT, calculate the amount of the instalment payments that would be required for a five-year instalment note. (Hint: Refer to Chapter 3 for tips on calculating.) Use the same cost of the land to Concord Corporation that you determined for the mortgage note in a previous part of the question. (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answer to O decimal places, e.g. 5,275.) Amount of the instalment $ e Textbook and Media List of Accounts Assume that Silverman had insisted on obtaining an instalment note from Concord instead of a mortgage note. Prepare an effective interest amortization table for the five-year term of the instalment note. (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 5,275. Do not leave any answer field blank. Enter O for amounts.) Instalment Note Payable Discount Amortizod Note Camina Ama nata Cach Daid Intnoant unnnon Assume that Silverman had insisted on obtaining an instalment note from Concord instead of a mortgage note. Prepare an effective interest amortization table for the five-year term of the instalment note. (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 5,275. Do not leave any answer field blank. Enter O for amounts.) Instalment Note Payable Discount Amortized Note Carrying Amc Date Cash Paid Interest Expense June 1 2020 $ June 1 2021 $ $ $ June 1 2022 June 1 2023 June 1 Instalment Note Payable Discount Amortized Note Carrying Amc Date Cash Paid Interest Expense June 1 2020 $ June 1 2021 $ $ ta $ June 1 2022 June 1 2023 June 1 2024 June 1 2025 $ $ Instalment Note Payable Discount Amortized Note Carrying Amount Cash Paid Interest Expense $ $ $ $ $ $ e Textbook and Media List of Accounts Prepare the journal entry for the purchase of the land and the issuance of the instalment note. (Round answers to 0 decimal places, e.g. 5,275. 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 O for the amounts.) Date Account Titles and Explanation Debit Credit June 1, 2020 e Textbook and Media List of Accounts Prepare any adjusting journal entry that is required at the end of the fiscal year and the first payment made on June 1, 2021, assuming no reversing entries are used. (Round answers to 0 decimal places, e.g. 5,275. 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 O for the amounts.) Date Account Titles and Explanation Debit Credit Dec. 31, 2020 June 1, 2021 e Textbook and Media Compare the balances of the two different notes payable and related accounts at December 31, 2020. Be specific about the classifications on the statement of financial position. Mortgage Note Payable Concord Corporation (Partial) Statement of Financial Position For the Year Ended December 31, 2020 V $ Instalment Note Payable Concord Corporation (Partial) Statement of Financial Position Instalment Note Payable Concord Corporation (Partial) Statement of Financial Position 07 e Textbook and Media Question 1 of 3 -78 III View Policies Current Attempt in Progress On June 1, 2020, Concord Corporation approached Silverman Corporation about buying a parcel of undeveloped land. Silverman was asking $ 242,000 for the land and Concord saw that there was some flexibility in the asking price. Concord did not have enough money to make a cash offer to Silverman and proposed to give, in return for the land, a $ 305,000, five-year promissory note that bears interest at the rate of 4%. The interest is to be paid annually to Silverman Corporation on June 1 of each of the next five years. Silverman insisted that the note taken in return become a mortgage note. Silverman accepted the amended offer, and Concord signed a mortgage note for $ 305,000 due June 1, 2025. Concord would have had to pay 10% at its local bank if it were to borrow the cash for the land purchase. Silverman, on the other hand, could borrow the funds at 9%. Both Concord and Silverman have calendar year ends. 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. Using (1) factor tables, (2) a financial calculator, or (3) Excel function PV, calculate the purchase price of the land and prepare an effective interest amortization table for the term of the mortgage note payable that is given in the exchange. (Hint: Refer to Chapter 3 for tips on calculating.) (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimal places, e.g. 5,275.) Purchase price of the land $ 235,629 Mortgage Note Payable - Interest Amortization Note Mortgage Note Payable - Interest Amortization Note Carrying Amc Date Cash Paid Interest Expense Discount Amortized June 1 2020 $ June 1 2021 $ 12,200 GA 23,563 $ 11,363 June 12,200 24,699 12,499 1 2022 June 1 2023 12,200 25,949 13,749 2 June 1 2024 12,200 27,324 15,124 June 1 2025 317,200 28,836 16,636 Mortgage Note Payable - Interest Amortization Note Carrying Amount Cash Paid Interest Expense Discount Amortized $ 235,629 $ 12,200 $ 23,563 $ 11.363 246,991 12,200 24,699 12,499 259,491 12,200 25,949 13,749 273,240 12,200 27,324 15,124 288,364 317,200 28,836 16,636 0 $ 130,371 $ 69,371 $ S 130,371 $ 69,371 eTextbook and Media List of Accounts Prepare the journal entry for the purchase of the land. (Round answers to O decimal places, e.g. 5,275. 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 O for the amounts.) Date Account Titles and Explanation Debit Credit June 1, 2020 Land 235,629 Notes Payable 235,629 e Textbook and Media Prepare any adjusting entry that is required at the end of the fiscal year and the first payment made on June 1, 2021, assuming no reversing entries are used. (Round answers to 0 decimal places, e.g. 5,275. 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 O for the amounts.) Date Account Titles and Explanation Debit Credit Dec. 31, 2020 Interest Expense 13,745 Interest Payable 7,117 Notes Payable 6,628 June 1, 2021 Interest Expense 9,818 Interest Payable 7.117 Cash 12,200 Notes Payable 4,735 e Textbook and Media Assume that Silverman had insisted on obtaining an instalment note from Concord instead of a mortgage note. Using (1) factor tables, (2) a financial calculator, or (3) Excel function PMT, calculate the amount of the instalment payments that would be required for a five-year instalment note. (Hint: Refer to Chapter 3 for tips on calculating.) Use the same cost of the land to Concord Corporation that you determined for the mortgage note in a previous part of the question. (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answer to O decimal places, e.g. 5,275.) Amount of the instalment $ e Textbook and Media List of Accounts Assume that Silverman had insisted on obtaining an instalment note from Concord instead of a mortgage note. Prepare an effective interest amortization table for the five-year term of the instalment note. (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 5,275. Do not leave any answer field blank. Enter O for amounts.) Instalment Note Payable Discount Amortizod Note Camina Ama nata Cach Daid Intnoant unnnon Assume that Silverman had insisted on obtaining an instalment note from Concord instead of a mortgage note. Prepare an effective interest amortization table for the five-year term of the instalment note. (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 5,275. Do not leave any answer field blank. Enter O for amounts.) Instalment Note Payable Discount Amortized Note Carrying Amc Date Cash Paid Interest Expense June 1 2020 $ June 1 2021 $ $ $ June 1 2022 June 1 2023 June 1 Instalment Note Payable Discount Amortized Note Carrying Amc Date Cash Paid Interest Expense June 1 2020 $ June 1 2021 $ $ ta $ June 1 2022 June 1 2023 June 1 2024 June 1 2025 $ $ Instalment Note Payable Discount Amortized Note Carrying Amount Cash Paid Interest Expense $ $ $ $ $ $ e Textbook and Media List of Accounts Prepare the journal entry for the purchase of the land and the issuance of the instalment note. (Round answers to 0 decimal places, e.g. 5,275. 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 O for the amounts.) Date Account Titles and Explanation Debit Credit June 1, 2020 e Textbook and Media List of Accounts Prepare any adjusting journal entry that is required at the end of the fiscal year and the first payment made on June 1, 2021, assuming no reversing entries are used. (Round answers to 0 decimal places, e.g. 5,275. 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 O for the amounts.) Date Account Titles and Explanation Debit Credit Dec. 31, 2020 June 1, 2021 e Textbook and Media Compare the balances of the two different notes payable and related accounts at December 31, 2020. Be specific about the classifications on the statement of financial position. Mortgage Note Payable Concord Corporation (Partial) Statement of Financial Position For the Year Ended December 31, 2020 V $ Instalment Note Payable Concord Corporation (Partial) Statement of Financial Position Instalment Note Payable Concord Corporation (Partial) Statement of Financial Position 07 e Textbook and Media