Notes and Bonds Transaction

Question 1

12/31/19 Sold equipment 475000
AD 225000
6 payments of 50,000
first payment die 12/31/20
Stated rate 6%

(PVOA 245,866)

Answer 1

Debit AD
Debit NR
Credit Equipment
Debit LOS

Question 2

what is interest on a note?

Answer 2

Anything over present value

Question 3

Is it a gains or loss on sale when the book value is lower than the present value?

Answer 3

Gains on sale

Question 4

How do you calculate interest?

Answer 4

Carrying value * i

Question 5

12/31/19 sold equipment cost 475,000
AD 225,000
6 annual payments of 50,000
first payment due 12/31/19
stated rate 6%

(PVAD 260,618)

Answer 5

debit cash
debit AD
debit NR
credit equipment
credit gains

Question 6

what is the transaction for payments interest on an annuity for the seller?

Answer 6

debit cash
credit int exp
credit NR

Question 7

what is the transaction for interest on a single sum for the seller?

Answer 7

debit NR
credit Int rev

Question 8

12/31/2019 sold equipment cost 150,000
down payment 80,000
note for 250,000 due 12/31/22
stated rate 6%

(PVSS 209,905)

Answer 8

debit Cash 80,000
debit NR 209,905
credit rev 289,905
debit cogs 150,000
credit Inv 150,000

Question 9

How do I find a book value of something OOCB?

Answer 9

cogs - ad

Question 10

How do i record the transaction for PVAD/IOCB?

Answer 10

debit cash
debit NR
Credit rev
Debit cogs
Credit inv

Question 11

What the income statement layout

Answer 11

rev
cogs
gp
oe
ore
ibt
tax
ni

Question 12

what is the transaction for adjusting entry on a note?

Answer 12

debit int rec
credit int rev

Question 13

what is the transaction with reversing entry on a note?

Answer 13

debit cash
credit int exp
credit NR

Question 14

what is the transaction without reversing entry on a note?

Answer 14

debit cash
credit int rec
credit int rev
credit NR

Question 15

How do you calculate n?

Answer 15

Life x ppy

Question 16

How do you calculate i?

Answer 16

MR / ppy

Question 17

How do I record a non interesting bearing note (Seller)?

Answer 17

Notes receivable at face value (debit)
Discount notes receivables (credit)

Question 18

How do I record a non interest bearing note (buyer)?

Answer 18

Debit equipment PV
Credit NP at FV
Debit DNP

Question 19

What is the transaction of interest of on a single sum note for the buyer?

Answer 19

Debit Int exp
Credit NP

Question 20

How do you calculate annuity payments on a bond?

Answer 20

FV*(SR/ppy)

Question 21

What are the two notes on a bond?

Answer 21

PVOA and PVSS

Question 22

How do you calculate issue price?

Answer 22

PVOA + PVSS

Question 23

How do you issue a bond?

Answer 23

Debit Cash (PV)
Credit BP (FV)
PBP(Credit) / DBP(Debit)

Question 24

How do you record a bond?

Answer 24

record bonds at face value and difference will be accounted for with premiums and discounts

Question 25

What is the layout for an amortization table (left to right)?

Answer 25

Date > Cash> Int > Amt > CV > Int payments

Question 26

How do you record interest on a bond?

Answer 26

Debit Int exp Credit Cash DBP (Credit) / PBP(Debit) = amt value

Question 27

If the bond stated rate is higher than the market rate, is the bond issued at a premium or discount?

Answer 27

Premium

Question 28

How do you record interest on a bond w/o reversing entry?

Answer 28

Debit int pay Debit int exp Credit Cash PBP/DBD

Question 29

How do you record the adjusting entry for a bond?

Answer 29

Debit int exp credit int pay

Question 30

What do you adjust for?

Answer 30

interest in the correct period

Question 31

How do I calculate interest on a bond?

Answer 31

(annuity * n) - Premium OR + Discount

Question 32

How do I split carrying value on a balance sheet?

Answer 32

rev/amt is a CA and remaining note balance is LTI

Question 33

What is net sales on income statement?

Answer 33

present value paid (annuities or downpayments)

Question 34

what is int on an income statement for a note?

Answer 34

other revenue (+ GP)