Purchase Solution

Acme Company

Not what you're looking for?

Ask Custom Question

On January 1, 2013, Acme Company makes the two following acquisitions.

Purchases land having a fair market value of $329,000.00 by issuing a 5-year, zero-interest-bearing promissory note in the face amount of $554,384.74.
Purchases equipment by issuing a 6%, 8-year promissory note having a maturity value of $469,000.00 (interest payable annually).
The company has to pay 11% interest for funds from its bank.

(a) Record the two journal entries that should be recorded by Acme Company for the two purchases on January 1, 2013.

(b) Record the interest at the end of the first year on both notes using the effective-interest method.

Purchase this Solution
Solution Summary

Your tutorial, attached in excel, has a full amortization schedule for both notes, one at the imputed rate and the other using the note's actual rate. Entries are shown for purchase and year end interest accrual.

Solution provided by:
Carol Sargent, PhD
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
Recent Feedback
  • "hey just wanted to know if you used 0% for the risk free rate and if you didn't if you could adjust it please and thank you "
  • "Thank, this is more clear to me now."
  • "Awesome job! "
  • "ty"
  • "Great Analysis, thank you so much"
Purchase this Solution
Free BrainMass Quizzes
Organizational Leadership Quiz

This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.

Transformational Leadership

This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.

Understanding Management

This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.

SWOT

This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.

Basic Social Media Concepts

The quiz will test your knowledge on basic social media concepts.

View More Free Quizzes
Related BrainMass Solutions

  • Roles of CPA and Accounting Engagements

    433575 CPA Smith completed an accounting engagement for the ACME Company on December 20, 20X1, and sent ACME a bill for $5,000 which ACME paid on January 25, 20X2.

  • Acme's Greenfield investment: Financial aspects of Acquisition

    If Acme issues bonds, the company management retains full control of the company and its operations. The reason is that the bond holders cannot vote or cannot interfere in the day to day operations of the company.

  • Acme Life Insurance Company liability

    261152 Acme Life Insurance Company liability The Acme Life Insurance Company sends out 5,000 emails to prospective customers to announce that it has just hired Frank Unctious as its newest sales representative.

  • Acme Water Price Ceiling

    70971 Acme Water Price Ceiling Acme Water is a privately owned company that is the sole supplier of water to a rural town in Pennsylvania.

  • ACME Electric Motors and Controls Company: strategy for survival

    191426 ACME Electric Motors and Controls Company: strategy for survival ACME Electric Motors and Controls Company is a US Based midsize company manufacturing and selling electric motors and controls to customers in US, Canada, and Mexico.

  • Confidence Interval ACME Lumber

    180307 Confidence Interval ACME Lumber ACME Lumber Company selects a random sample of 36 customers. Customers are rated on their annual spend at ACME Lumber Stores.

  • Multinational Corporation

    In case of ACME equity financing will not place any financial or liquidity strain in acquiring the company. next the shareholders do not have to be paid dividends unless ACME is making sufficient profits.

  • Impact of Deferred Taxes on Net Income for ACME

    Moreover, in the point of view of investors, who without properly analyzing the financial disclosures of Acme, may be deceive into thinking that the company is much financially healthier that it is which could result to erroneous investment decisions

  • Acme Corporation (a U.S. company located in Sarasota, Florida)

    93700 Acme Corporation (U.S. Company Located in Sarasota, Florida) 27.

  • The Acme Company

    424291 Acme Company stock price and common stock. The Acme Company, whose stock price is now $25, needs to raise $20million in common stock.

View More Related Solutions