Question
On July 1, 2017, Bridgeport Inc. made two sales.
Bridgeport Inc. recently had to pay 9% interest for money that it borrowed from British National Bank. The customers in these two transactions have credit ratings that require them to borrow money at 11% interest.
Record the two journal entries that should be recorded by Bridgeport Inc. for the sales transactions above that took place on July 1, 2017. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 5,275. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
1. It sold land having a fair value of $906,700 in exchange for a 4-year zero-interest-bearing promissory note in the face amount of $1,376,436. The land is carried on Bridgeport's books at a cost of $593,200.
2. It rendered services in exchange for a 4%, 8-year promissory note having a face value of $401,380 (interest payable annually). + Firefox File Edit View History Bookmarks Tools Window Help ... INI Topic: Report 6 SAMPLE FLEET E Monitoring your w WilayPLUS (E) C 6A https://edugen.wileyplus.com/edugen/student/mainfr.uni Í WileyPLUS X O Q 10% D Sun 9:35 PM 9 0 = C Cullumber Comi C chegg Study I 20 Benefits of G What Is GPS? | + ... v Q 14,790 N O wileyPLUS: MyWlleyPLUS | Help | Contact Us | Log Out INTERMEDIATE ACCOUNTING I & II (ACCT 350/351) WileyPLUS Kieso, Intermediate Accounting, 16e Home Read, Study & Practice Assignment Gradebook ORION Downloadable eTextbook Assignment > Open Assignment CALCULATOR FULL SCREEN PRINTER VERSION BACK NEXT > Problem 7-8 (Part Level Submission) On December 31, 2017, Bridgeport Inc. rendered services to Beghun Corporation at an agreed price of $119,908, accepting $47,000 down and agreeing to accept the balance in four equal installments of $23,500 receivable each December 31. An assumed interest rate of 11% is imputed. -O ASSIGNMENT RESOURCES Chapter 7 Homework Exercise 7-2 Exercise 7-4 2 Exercise 7-7 Exercise 7-13 Exercise 7-14 (Part Level Submission) Exercise 7-17 Exercise 7-19 (Part Level Submission) Problem 7-3 (Part Level Submission) Problem 7-8 (Part Level Submission) v (a1) Prepare an amortization schedule. Assume that the effective-interest method is used for amortization purposes. (Round answers to o decimal places, e.g. 5,275.) December 31, 2017 Schedule of Note Discount Amortization Date Cash Received Interest Revenue Carrying Amount of Note 12/31/17 12/31/18 Review Score Review Results by Study Objective 12/31/19 12/31/20 12/31/21 SHOW LIST OF AccoUNTS LINK TO TEXT 9 O 2 OS 11 IL A S O @ 6 7 lw 90 m (A O OY WE AI BAT
Explanation / Answer
Date Accounts and Explanation Debit Credit 2017-jul-1 Notes receivable 1376436 Land 593200 Discount on notes receivable (1376436-906700) 469736 gain on sale of the Land 313500 ( To record the sale of land) 2017-jul-1 Notes receivable 401380 Discount on Notes receivable 144588.6 Service revenue 256791.4 ( To record the service revenue) Year cash Flows Discount factor@11% Present value @11% 0 (401380*4%) 1 1 16055.2 0.9009009 14464.14 2 16055.2 0.8116224 13030.76 3 16055.2 0.7311914 11739.42 4 16055.2 0.658731 10576.06 5 16055.2 0.5934513 9527.98 6 16055.2 0.5346408 8583.766 7 16055.2 0.4816584 7733.122 8 16055.2 0.4339265 6966.777 401380 0.4339265 174169.4 Present value 256791.4
