Determine amount of interest income

Assignment Help Accounting Basics
Reference no: EM13150374

On January 1, 2010, Jacobs Company sold property to Dains Company which originally cost Jacobs $760,000. There was no established exchange price for this property. Danis gave Jacobs a $1,200,000 zero-interest-bearing note payable in three equal annual installments of $400,000 with the first payment due December 31, 2010. The note has no ready market. The prevailing rate of interest for a note of this type is 10%. The present value of a $1,200,000 note payable in three equal annual installments of $400,000 at a 10% rate of interest is $994,800. What is the amount of interest income that should be recognized by Jacobs in 2010, using the effective-interest method?

a) $0.

b) $40,000.

c) $99,480.

d) $120,000.

Reference no: EM13150374

Questions Cloud

Compute value of the test statistic for hypothesis test : Compute the value of the test statistic for this hypothesis test. Using the p-value, at 95% confidence, test to determine whether the measures were effective in reducing the average price.
What mass of urea is produced per minute by the reaction : Ammonia gas at 223°C and 90. atm flows into a reactor at a rate of 680. L/min. Carbon dioxide at 223°C and 43 atm flows into the reactor at a rate of 600. L/min. What mass of urea is produced per minute by this reaction assuming 100% yield?
Does the data support the mayor-s claim : It was revealed that 120 people had only 1 admission, 81 had 2 admissions, 48 had 3 admissions, 18 had 4 admissions, 18 had 5 admissions, and 15 had 6 admissions or more admissions. Does the data support the mayor's claim?
Determine manufacturing cost per unit : _____ is the manufacturing cost per unit if the contribution approach is used. a. $28 b. $31 c. $36 d. $40
Determine amount of interest income : The present value of a $1,200,000 note payable in three equal annual installments of $400,000 at a 10% rate of interest is $994,800. What is the amount of interest income that should be recognized by Jacobs in 2010, using the effective-interest me..
How much heat is required to warm ice : How much heat is required to warm 225 g of ice from -44.7°C to 0.0°C, melt the ice, warm the water from 0.0°C to 100.0°C, boil the water, and heat the steam to 173.0°C?
Calculate the mass of water formed : Calculate the mass of water formed by the complete reaction of 935 g of propane (C3H8) with excess oxygen. (Write a balanced equation)
Determine the standard error for the sample mean : A mean of 1 centimeter and a standard deviation of 0.1 centimeter. A random sample of 12 computer chips is taken. what is the standard error for the sample mean?
Calculate the amount of energy in kilojoules needed : calculate the amount of energy in kilojoules needed to change 153g of water ice at -10 C to steam at 125 C.

Reviews

Write a Review

Accounting Basics Questions & Answers

  Additional first-year depreciation

It is used 100% of the time for business and it is the only business asset acquired by Norm during 2010. Compute the maximum deduction with respect to the SUV for 2010. If Congress reenacts additional first-year depreciation for 2010, Norm elects ..

  Journal entry to record cost of goods sold

High Ridge Merchandising Co. sold inventory that had a cost of $10,000. Assuming High Ridge uses the perpetual inventory method, the effect of the journal entry to record Cost of Goods Sold would:

  What is the amount of interest expense recorded

Pirate, Inc. leased equipment from Shoreline Enterprises under a four-year lease requiring equal annual payments of $180,000, with the first payment due at lease inception.

  Under equity method-subsidiary debt

Under the equity method, a parent company that has guaranteed all of its subsidiary's debt would:

  Single class of stock

What is the maximum percentage of Alpha Corporation's single class of stock that Mariano can sell to a single shareholder without triggering the Sec. 382 loss limitation?

  Participation in an employer-sponsored plan

If he does not participate in an employer-sponsored plan, what is the maximum deductible IRA contribution John can make in 2010?

  What was the cost of goods sold for the month

During August, the cost of goods manufactured was $73,000. The beginning finished goods inventory was $15,000 and the ending finished goods inventory was $21,000. What was the cost of goods sold for the month?

  Equity section of the balance sheet

Prepare journal entries to record the treasury stock transactions. Prepare the equity section of the balance sheet for Cosmo Company.

  Problem related to fixed overhead

The manufacturing costs for 40,000 units are: direct materials $900,000; direct labor $450,000; variable overhead $900,000; and fixed overhead $750,000. All costs except $500,000 in fixed overhead will be avoided if the parts are purchased.

  What is the full cost of the globe

Assume that the quantity demanded at the price calculated in part a is only 600 units. What is the full cost of the globe, and what is the price with a 25 percent markup?

  What insights did you gain form looking at the various ratio

A. For the following ratios create trend charts for WFM for 10 years 2002 - 2011. Use ratio data from Morningstar online database: Current ratio, Average collection period, Debt/Equity, Times interest earned, and Operating profit margin. Use separ..

  Overstate current period net income

Which of the following would not overstate current period net income?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd