Subject: Accounting

 

 

1. Kulot Company acquires a new manufacturing equipment on January 1, 2006, on installmentbasis. The deferred payment contract provides for a down payment of P300,000 and an 8-year notefor P3,104,160. The note is to be paid in 8 equal annual installment payments of P388,020,including 10% interest. The payments are to be made on December 31 of each year, beginningDecember 31,2006. The equipment has a cash price equivalent of P2,370,000. Kulot's financialyear-end is December 31.A. Prepare the necessary journal entries for the first 2 years of installment:B. Answer the following:1. What is the acquisition cost of the equipment? 235416g2. The amount to be recognized on January 1, 2006, discount on note payable is_3. The amount of interest expense to be recognized in 2006 is4. The amount of interest expense to be recognized in 2007 is _5. The carrying value of the note payable at December 31, 2007, is That420II. Xyber Company is contemplating to exchange a machine used in its operations. Xyber receivedthe following offers from interested companies.1) Ayi Company offered to exchange a similar machine plus P345,000 cash.2) Butsoy Company offered to exchange similar machine.3) Oneng Company offered to exchange similar machine, but wanted P120,000 in addition toCarillon's machine.cyberPresented below are the machine's cost, accumulated depreciation, and fair value:XyherAylButsoyOnengCostP2,400,000P1,800,000P2,205,000P2,400,060Accum Dep 750,000675,0001,065,0091,125,000Fair Value 1,380,0001,035,0001,380,0001,500,000For each of the above exchange situations, prepare the journal entries to record the exchange onthe books of each company. Assume that at exchange situations have commercial substance.