Carlos transfers property with a tax basis of $750 and a fair market value of $1,200 to a corporation in exchange for stock with a fair market value of $975 and $75 cash in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $150 on the property transferred. What is the corporation's tax basis in the property received in the exchange
Answer:
$975
Explanation:
Use the following formula to calculate the Corporation's Tax basis in the property received in exchange
Corporation's Tax basis = Tax basis of Property transferred + Gain recognized
Where
Tax basis of Property transferred = $750
Gain recognized = 975 - $750 = $225
Placing values in the formula
Corporation's Tax basis = $750 + $225
Corporation's Tax basis = $975
At the beginning of the tax year, Barnaby's basis in the BBB Partnership was $50,000, including his $5,000 share of partnership debt. At the end of the tax year, his share of debt was $8,000. His share of the partnership's income for the year was $20,000, and he received cash distributions totaling $12,000. In addition, his share of the partnership's nontaxable income was $1,000.
Required:
Determine Barnaby's basis at the end of the tax year.
Answer:
$62,000
Explanation:
Calculation to Determine Barnaby's basis at the end of the tax year
Using this formula
Ending tax year Barnaby's basis in the partnership=[BBB Partnership basis+( Share of debt-Share of partnership debt)+ Share of Partnership's income +Share of partnership's nontaxable income-Cash distributions]
Let plug in the formula
Ending tax year Barnaby's basis in the partnership =$50,000 + ($8,000-$5,000) + $20,000 + $1,000 - $12,000
Ending tax year Barnaby's basis in the partnership =$50,000 + $3,000 + $20,000 + $1,000 - $12,000
Ending tax year Barnaby's basis in the partnership = =$62,000
Therefore Barnaby's basis at the end of the tax year will be $62,000
Bad Wolf Enterprises is recalling and reissuing an outstanding bond offering. The reissued bond offering will be 10 year 5% coupon bonds. The present value of the coupons savings of the new offering is $588,365, the future value of the extra principal payment of the new offering is $350,000, and the administrative fees associated with the recall and reissue are $112,394. Calculate the net benefit ( ) or cost (-) of the call and reissue for Bad Wolf Enterprises
Answer:
Bad Wolf Enterprises
The net benefit of the call and reissue for Bad Wolf Enterprises is:
= $261,071.
Explanation:
Data and Calculations:
Bond maturity period = 10 years
Coupon rate = 5%
Present value factor at 5% for 10 years = 0.614
Present value of the coupons savings of the new offering = $588,365
Future value of the extra principal payment of the new offering = $350,000
Present value of the extra principal payment = $214,900 ($350,000 * 614)
Administrative fees associated with the recall and reissue = $112,394
Total cost = $327,294 ($214,900 + $112,394)
The net benefit of the call and reissue = Total benefits minus total costs
= $261,071 ($588,365 - $327,294)
which activity is an economic activity?
a / watching tv
b / reading a book
c / playing video games
d / helping a friends decorate for a party
e / selling vegetables and fruits
Answer:
e
Explanation:
by buying goods you are stimulating the economy
Carolyn wants to work as a manager. The position she is hoping to be hired for requires a doctorate degree. For what type of position might she be applying?
A. elementary education
B. executive management
C. upper-level administration
D. post-secondary institution
Answer:
C. upper-level administration
Explanation:
.
Pettijohn Inc. The balance sheet and income statement shown below are for Pettijohn Inc. Note that the firm has no amortization charges, it does not lease any assets, none of its debt must be retired during the next 5 years, and the notes payable will be rolled over. Refer to the data for Pettijohn Inc. What is the firm's dividends per share
Answer:
The appropriate solution is "$2.91". A further explanation is given below.
Explanation:
Seems that the given question is incomplete. Below is the attachment of the full problem.
According to the question,
Common dividend,
= 509.83
Shares outstanding,
= 175
Now,
The dividend per share will be:
= [tex]\frac{Common \ dividend}{Shares \ outstanding}[/tex]
On substituting the values, we get
= [tex]\frac{509.83}{175}[/tex]
= [tex]2.9133[/tex]
or,
= [tex]2.91[/tex]
Mike and Marianne pulled their resources together to open a coffee place. They each put $20,000 and also took a bank loan of $20,000. Interest rate the bank charges is 8% and estimated tax rate is 30% for their business. If they both want a 12% return on their investment, what is the weighted average cost of capital
Answer:
WACC= 9.8%
Explanation:
The weighted Average cost of Capital is the average cost of capital for the different sources of long-term capital available to a firm weighted according to the proportion each source of finance bears to the total capital in the pool.
After-tax cost of debt = (1- tax rate) × before tax cost of debt
= (1-0.3)× 8% = 5.6%
Total Equity = 20,000× 2= 40,000.
Bank loan = 20,000
Total value fund = 40,000 + 20,000 = 60,000
WACC= 5.5%× (2/6) + 12%× (4/6) = 9.8%
WACC= 9.8%
You are the manager of a monopoly that faces a demand curve described by P = 63 − 5Q. Your costs are C = 10 + 3Q. The profit-maximizing output for your firm is:
Answer:
Profit-maximizing output = 6 units
Explanation:
Given:
Demand curve = P = 63 − 5Q
Cost C = 10 + 3Q
Find:
Profit-maximizing output
Computation:
In monopoly maximum profit stand where;
MR = MC
So,
TR = P x Q
TR = (63 - 5q)Q
TR = 63Q - 5Q²
MR = d(TR) / dQ
So,
MR = d[63Q - 5Q²] / dQ
MR = 63 - 10Q
MC = dC / dQ
MC = d(10+3Q) / dQ
MC = 3
So,
Profit-maximizing output
MR = MC
63 - 10Q = 3
Q = 6
Profit-maximizing output = 6 units
The Hollister Company acquires a silver mine at the cost of $1,600,000 on January 1. Along with the purchase price Hollister pays additional costs associated with development of $50,000. Hollister expects the mine will have a salvage value of $175,000 once all the silver has been mined. Best estimates are that the mine contains 250,000 tons of ore.
a. Prepare the entry to record the purchase of the silver mine.
b. Prepare the December 31 year-end adjusting entry to record depletion is 60,000 tons of ore are mined and all the ore is sold.
c. Prepare the December 31 year-end adjusting entry to record depletion is 60,000 tons of ore are mined but only 15,000 tons of the ore are sold.
Answer:
Part a
Debit : Silver Mine $1,650,000
Credit : Cash $1,650,000
Part b
Debit : Depletion expense $354,000
Credit : Accumulated depletion $354,000
Part c
Debit : Depletion expense $354,000
Credit : Accumulated depletion $354,000
Explanation:
Step 1 : Cost of the Silver Mine
Purchase Price $1,600,000
Development Costs $50,000
Total Cost $1,650,000
Step 2 : Depletion rate
Depletion rate = (Cost - Salvage value) ÷ Estimate Usage
= $5.90
Step 3 : Depletion expense
Note : Depletion expense depends on units mined only instead of units sold.
Depletion expense = Depletion rate x Units mined
if 60,000 tons of ore are mined and sold :
Depletion expense = $354,000
if 60,000 tons of ore are mined but only 15,000 tons of the ore are sold :
Depletion expense = $354,000
Which is not true of strategic alliances?
Question Completion with Options:
a. Strategic alliances refer to cooperative agreements between potential or actual competitors.
b. A firm that enters long-term alliances is expanding its strategic flexibility by committing to its alliance partners.
c. Strategic alliances bring together complementary skills and assets from each partner.
d. Joint venture is not a type of strategic alliances.
Answer:
d. Joint venture is not a type of strategic alliances.
Explanation:
A Joint venture is one of the strategic alliances that companies can form. Other forms of strategic alliances include equity and nonequity strategic alliances. In the first place, a strategic alliance is a corporate arrangement that enables two or more companies to undertake some mutually beneficial projects. With the alliance, each company still retains its independence, knowledge and resources are shared, and new products and markets are developed.
Alexa and David are managers of different sales teams. Together, they decide to have a competition between teams to see who can bring in the most new clients this month. To increase the sense of competition, they create spirit days where they wear team colors (Alexa's team: blue, David's black), strategize ways to beat the other group, and keep a running total of who is winning on a white board. Alexa and David are employing______to increase productivity.
A. Social identity theory.
B. Parasocial interaction theory.
C. Leader-member exchange theory.
D. Vigilant interaction theory.
E. Expectancy theory.
Answer:
D. Vigilant interaction theory
Explanation:
It is correct to say that Alexa and David are employing the theory of vigilant interaction to increase productivity.
This theory is related to the team's decision-making process, that is, its objective is the integration and collaboration of the entire group with innovative and creative contributions that help in solving problems, helping in a more effective decision-making that contributes for the positive end result of the team.
Therefore, when using the strategy of increasing the sense of competition in the teams, managers seek the theory of vigilant interaction so that the final result and the goals of the teams are achieved.
Dog Bone Bakery, which bakes dog treats, makes a special biscuit for dogs. Each biscuit uses 0.75 cup of pure semolina flour. They buy 4,000 cups of flour at $0.55 per cup. They use 3,588 cups of flour to make 4,800 biscuits. The standard cost per cup of flour is $0.54. A. What are the direct materials price variance, the direct materials quantity variances, and the total direct materials cost variance
Answer:
Results are below.
Explanation:
To calculate the direct material rate and quantity variance, we need to use the following formulas:
Direct material price variance= (standard price - actual price)*actual quantity
Direct material price variance= (0.55 - 0.54)*4,000
Direct material price variance= $40 favorable
Direct material quantity variance= (standard quantity - actual quantity)*standard price
Direct material quantity variance= (0.75*4,800 - 3,588)*0.55
Direct material quantity variance= $6.6 favorable
Finally, the total variance:
Total direct material variance= 40 + 6.6= $46.6 favorable
Signal mistakenly produced 1,075 defective cell phones. The phones cost $70 each to produce. A salvage company will buy the defective phones as they are for $39 each. It would cost Signal $82 per phone to rework the phones. If the phones are reworked, Signal could sell them for $146 each. Signal has excess capacity. Should Signal scrap or rework the phones
Answer: Rework the phones
Explanation:
The phones have already been produced so the cost price of $70 does not matter as it is a sunk cost.
The decision the company makes between scrap and reworking will depend on which option bring in more money.
Scrap = $39
Reworking:
= Price after reworking - Cost to rework
= 146 - 82
= $64
Incremental income of reworking over scrap:
= 1,075 * (64 - 39)
= $26,875
Signal makes an incremental income of $26,875 if they rework the phones so they should do that.
Exercise 9-19 (Algorithmic) (LO. 3) Brenda, a self-employed taxpayer, travels from Chicago to Barcelona (Spain) on business. She is gone 10 days (including 2 days of travel) during which time she spends 5 days conducting business and 3 days sightseeing. Her expenses are $1,930 (airfare), $245 per day (meals), and $420 per night (lodging). Because Brenda stayed with relatives while sightseeing, she only paid for 5 nights of lodging. Compute Brenda's deductions for the following:
Answer:
a. $1,351
b. $857.5
c. $2,100
Explanation:
Computation for Brenda's deductions
a. Airfare= (70% × $1,930)
Airfare=$1,351
b. Meals= [(245/2)*7]
Meals=857.5
c. Lodging= [420*5]
Lodging=$2,100
Therefore Brenda's deductions are:
a. $1,351
b. $857.5
c. $2,100
How does a flourishing business affect trade?
Answer: Flourishing services trade could boost world growth ... it easier to export such services as business- process outsourcing, medical diagnostics or education.
Explanation: Trade involves the transfer of goods or services from one person or entity to another, often in exchange for money. Economists refer to a system or network that allows trade as a market. An early form of trade, barter, saw the direct exchange of goods and services for other goods and services.[1][need quotation to verify] Barter involves trading things without the use of money.[1] When either bartering party started to involve precious metals, these gained symbolic as well as practical importance.[citation needed] Modern traders generally negotiate through a medium of exchange, such as money
Canberra Company uses a job order cost accounting system. During the current month, the factory payroll of $180,000 was paid in cash. The amount of labor classified as direct labor was three times greater than the amount classified as indirect labor. What amount should be debited to Factory Overhead for indirect labor for this month
Answer:
$45,000
Explanation:
Details Amount
Factory payroll in cash $180,000
Ration of Direct labor to Indirect Labor "3:1"
Total = 3 + 1 = 4
So, Indirect Labor = $180,000*1/4 = $45,000
The amount to be debited to Factory Overhead for indirect labor for this month $45,000
Classic Limo, Inc. provides limousine service to Tri-Cities airport. The price of the service is fixed at a flat rate for each trip and most costs of providing the service are stable for each trip. Marc Pence, the owner, budgets income by estimating two factors that fluctuate with the economy: the fuel cost associated with each trip and the number of customers who will take trips. Looking at next year, Marc develops the following estimates of contribution margin (price less variable cost of the trip, including fuel) and for the estimated number of customers. Although Marc understands that it is not strictly true, he assumes that the cost of fuel and the number of customers are independent.
Contribution Margin Per
Scenario Ride (Price - Variable cost) Number of Customers
Excellent $40 10,500
Fair $25 6,000
Poor $15 4,500
In addition to the costs of a ride, Marc estimates that other service costs are $50,000 plus $5 for each customer (ride) in excess of 6,000 rides. Annual administrative and marketing costs are estimated to be $25,000 plus 10% of the contribution margin.
Required:
1) Using the above information, construct an Excel spreadsheet to prepare an analysis of the possible operating income for Classic Limo, Inc.
2) 2) If you were manager of Classic Limo, Inc. and had to choose only one budget scenario to use for planning for the year, which one of the nine scenarios would you choose?
Answer:
1) See the attached excel file for the analysis of the possible operating income for Classic Limo, Inc.
2) The scenario with the highest operating profit $280,500 which is Excellent with $40 Contribution Margin and 10,500 Numbers of Customers.
Explanation:
1) Using the above information, construct an Excel spreadsheet to prepare an analysis of the possible operating income for Classic Limo, Inc.
Note: See the attached excel file for the analysis of the possible operating income for Classic Limo, Inc.
2) If you were manager of Classic Limo, Inc. and had to choose only one budget scenario to use for planning for the year, which one of the nine scenarios would you choose?
The scenario that would be chosen is the scenario with the highest operating profit $280,500 which is Excellent with $40 Contribution Margin and 10,500 Numbers of Customers.
In 3 sentences. Why are open-ended questions helpful when landing a sale? (this is for customer service)
Answer:
By using open-ended questions, participants are able to express and articulate opinions that may be extreme, unusual, or simply ones that the researcher did not think about when creating the survey. This often provides researchers rich, relevant data for their studies
Explanation:
(hope this helps)
What does ceteris paribus mean?
ОА.
other things remain unequal
OB. other things remain constant
Oc. other things remain irregular
OD. other things remain unbalanced
Ceteris paribus mean : B. other things remain constant.
What is Ceteris paribus ?Ceteris paribus was a latin word that tend to means other things remain constant or the same.
Example of Ceteris paribus is when a marketer might say "ceteris paribus, we expect sales to increase by 20% if we lower the price of our product" to show that they are assuming that all other factors affecting sales such as advertising, competition, and consumer sentiment will remain the same
Therefore the correct option is B.
Learn more about Ceteris paribus here:https://brainly.com/question/868746
#SPJ1
XYZ company's prime costs total OMR 3,000,000 and its conversion costs
total OMR 7,000,000. If direct materials are OMR 2,000,000 and factory
overhead is OMR 6,000,000, then direct laboris
OMR 2,000,000 a
OMR 1,000,000 b
X
OMR 4,000,000
.c
OMR 3,000,000 d
OMR 3,500,000 e
Answer:
ok
Explanation:
Natchez, Inc. is considering the purchase of a new machine costing $200,000. The company will incur $5,000 per year in cash operating expenses but it will allow the company to earn an additional $100,000 per year in revenues. Natchez expects the machine to provide future benefits for 3 years and salvage value at the end of the 3-year period to be $10,000. The company uses straight-line depreciation method. The income tax rate is 30%. If the required rate of return is 10%, how much is the net present value of this project
Answer:
$20,138.74
Explanation:
Net present value is the present value of after-tax cash flows from an investment less the amount invested.
NPV can be calculated using a financial calculator
To determine cash flow, use this formula
Cash flow = (revenue - cost - depreciation) (1 - tax rate) + depreciation
Straight line depreciation expense = (Cost of asset - Salvage value) / useful life
(200,000 - 10,000) / 3 = 63,333
(100,000 - 5000 - 63,333) x ( 1 - 0.3) + 63,333 = 85499.90
Cash flow in year 0 = $-200,000
Cash flow in year 1 = 85499.90
Cash flow in year 2 = 85499.90
Cash flow in year 3 = 85499.90 + 10,000 = 95,499.90
I = 10
NPV = $20,138.74
To find the NPV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
In 1960, Frederick Herzberg constructed a two-dimensional paradigm of factors that affect people's work attitudes.
a. True
b. False
Answer:
A.
Explanation:
Frederick Herzberg was an American behavioral scientists who proposed the theory of Two-Factors. In his theory, he defined that an employee is motivated by two-factors, viz., motivators and hygience factors.
He remarks that motivators such as recognition and achievement motivates employees to work harder, whereas, hygience factors such as salary also effects employees motivation to work.
Therefore, the given statement is true. Thus option A is correct.
Spa Inc. gathered the following information related to its gift card sales for 2020, its first year of selling gift cards: Sales of nonrefundable gift cards, 2020$25,500 Gift card redemptions, 2020$18,360 Spa Inc. estimates that 95% of the value of gift cards sold in 2020 will be redeemed while 5% will remain unclaimed. Under the proportional method, what would Spa Inc. recognize for gift card breakage revenue in 2020
Answer: $969
Explanation:
Since 5% of the value of the gift card sold will be unclaimed, the amount claimed will be:
= $25500 - (5% × $25500)
= $25500 -(0.05 × $25500)
= $25500 - $1275
= $24225
We then find the percentage of the cards that have been redeemed already and this will be:
= $18360 / $24225
= 0.7579
= 76%
Therefore, breakage in revenue to be recognized will be:
= ($25500 × 5%) × 76%
= $1275 × 76%
= $1275 × 0.76
= $969
An object was thrown from rest upward with an initial velocity of 10m/s with time frame of 6s find the distance of the object from it's resting point
Answer:
5.10 m
Explanation:
Given that :
Initial Velocity, u = 10m/s
Time taken, t = 6s
Distance traveled by the object , s
The final velocity, v at this point = 0
Upward throw, g = - (negative)
Using the relation :
u² =. V²-2gs
g = 9.8 m/s
10² = 0² - 2(9.8)*S
100 = 19.6S
S = 100 / 19.6
Distance traveled = 5.10 m
Cornerstone Exercise 9-41 Ratio Analysis Red Corporation had $1,750,000 in total liabilities and $3,000,000 in total assets as of December 31, 2020. Of Red's total liabilities, $600,000 is long-term. Required: Calculate Red's debt to assets ratio and its long-term debt to equity ratio. Round your answers to four decimal places, if required. Debt to Total Assets fill in the blank 1 Long-Term Debt to Total Equity fill in the blank 2
Answer:
A. Debt to Total Assets ratio 0.5833 times
B. Long Term Debt to Total Equity Ratio 0.48 times
Explanation:
A. Calculation for Red's debt to assets ratio using this formula
Debt to Total Assets ratio = Total Liabilities/
Total Assets
Let plug in the formula
Debt to Total Assets ratio=$1,750,000/$3,000,000
Debt to Total Assets ratio=0.5833 times
Therefore the Debt to Total Assets ratio will be 0.5833 times
B. Calculation to determine its long-term debt to equity ratio
First step is to calculate the Shareholders’ Equity using this formula
Shareholders’ Equity = Total Assets – Total outside liabilities
Let plug in the formula
Shareholders’ Equity = $3,000,000-$1,750,000 Shareholders’ Equity =$1,250,000
Now let calculate the Long Term Debt to Total Equity Ratio using this formula
Long Term Debt to Total Equity Ratio = Long Term Debt/ Total Shareholder’s equity
Let plug in the formula Long Term Debt to Total Equity Ratio=$600,000/$1,250,000
Long Term Debt to Total Equity Ratio= 0.48 times
Therefore Long Term Debt to Total Equity Ratio will be 0.48 times
San Mateo Company had the following account balances at December 31, 2018, before recording bad debt expense for the year: Accounts receivable $ 1,400,000 Allowance for doubtful accounts (credit balance) 22,000 Credit sales for 2018 1,950,000 San Mateo is considering the following approaches for estimating bad debts for 2018: Based on 3% of credit sales Based on 6% of year-end accounts receivable What amount should San Mateo charge to bad debt expense at the end of 2018 under each method
Built-Tight is preparing its master budget for the quarter ended September 30. Budgeted sales and cash payments for product costs for the quarter follow.
July August September
Budgeted sales $58,500 $74,500 $53,500
Budgeted cash payments for Direct materials 16,060 13,340 13,660
Direct labor 3,940 3,260 3,340
Factory overhead 20,100 16,700 17,100
Sales are 25% cash and 75% on credit. All credit sales are collected in the month following the sale. The June 30 balance sheet includes balances of $15,000 in cash; $44,900 in accounts receivable; and a $4,900 balance in loans payable. A minimum cash balance of $15,000 is required. Loans are obtained at the end of any month when a cash shortage occurs. Interest is 1% per month based on the beginning-of-the-month loan balance and is paid at each month-end. If an excess balance of cash exists, loans are repaid at the end of the month. Operating expenses are paid in the month incurred and consist of sales commissions (10% of sales), office salaries ($3,900 per month), and rent ($6,400 per month).
Required:
Prepare a cash budget for each of the months of July, August, and September.
Answer:
Cash budgets are prepared to analyze the company real cash position. It only includes transaction in which real exchange of cash takes place.
Explanation:
Particulars July ; August ; September
Beginning Cash Balance 15,000 ; 15,000 ; 21,960
Cash receipts from customers 37,500 ; 51,400 ; 69,251
Total cash available 52,500 ; 66,400 ; 91,211
Cash Payments :
Direct Material 16,060 ; 13,340 ; 13,660
Direct labor 3,940 ; 3,260 ; 3,340
Overheads 20,100 ; 16,700 ; 17,100
Sales commission 5,850 ; 7,450 ; 5,350
Office Salaries 3,900 ; 3,900 ; 3,900
Rent 6,400 ; 6,400 ; 6,400
Interest on Bank loan 76 ; 0 , 0
Total Cash Payments 56,326 ; 51,050 ; 49,750
Ending Balance -3,826 ; 15,350 ; 41,461
g Assume that a hypothetical economy with an MPC of 0.8 is experiencing severe recession. Instructions: In part a, round your answers to 2 decimal places. Enter your answers as positive numbers. In part b, enter your answers as whole numbers. a. By how much would government spending have to rise to shift the aggregate demand curve rightward by $25 billion
Answer: $5 billion
Explanation:
First find the spending multiplier which is a multiplier that shows how Aggregate demand increases as a result of additional spending.
Multiplier = 1 / (1 - Marginal propensity to consume)
= 1 / ( 1 - 0.8)
= 5
If the government wants to raise Aggregate demand by $25 billion, they should spend:
Increase in AD = Amount * Multiplier
25 billion = Amount * 5
Amount = 25 / 5
= $5 billion
Preston Corp. is estimating its WACC. Its target capital structure is 20 percent debt, 20 percent preferred stock, and 60 percent common equity. Its bonds have a 12 percent coupon, paid semiannually, a current maturity of 20 years, and sells for $1,100. The firm could sell, at par, $100 preferred stock which pays a 6.07 percent annual dividend, but flotation costs of 5 percent would be incurred. Preston's beta is 1.2, the risk-free rate is 3 percent, and the market risk premium is 5 percent. The firm's marginal tax rate is 40 percent. What is Preston's WACC
The following selected transactions were completed by Fasteners Inc. Co., a supplier of buttons and zippers for clothing:
20Y3
Nov. 21. Received from McKenna Outer Wear Co., on account, a $96,000, 60-day, 3% note dated November 21 in settlement of a past due account.
Dec. 31. Recorded an adjusting entry for accrued interest on the note of November 21. 20Y4
Jan. 20. Received payment of note and interest from McKenna Outer Wear Co.
Required:
Journalize the entries to record the transactions.
Answer:
1. Nov-21
Dr Notes receivable $96,000
Cr Accounts receivable-McKenna Outer Wear Co. $96,000
2. Dec-31
Dr Interest receivable $320
Cr Interest revenue $ 320
3 Jan-20
Dr Cash $96,480
Cr Note Receivable $96,000
Cr Interest receivable $160
Cr Interest receivable $320
Explanation:
Preparation of the journal entries
1. Nov-21
Dr Notes receivable $96,000
Cr Accounts receivable-McKenna Outer Wear Co. $96,000
(To record note received)
2. Dec-31
Dr Interest receivable $320
($96,000*3%*40/2/360)
Cr Interest revenue $ 320
(To record Interest accrued till Dec 31)
3 Jan-20
Dr Cash $96,480
($96,000+$160+$320)
Cr Note Receivable $96,000
Cr Interest receivable $160
($96,000*3%*20/2/360)
Cr Interest receivable $320 ($96,000*3%*40/2/360)
(To record payment received of note and interest)
