Star, Inc. sold used equipment with a cost of $16,000 and a carrying amount of $

Question

Star, Inc. sold used equipment with a cost of $16,000 and a carrying amount of $2,180 to Blue Spruce Corp. in exchange for a $4,900, three-year non–interest-bearing note receivable. Although no interest was specified, the market rate for a loan of that risk would be 8%. Assume that Star's Inc. follows IFRS.

A) Prepare the entry to record the sale of Star’s equipment and receipt of the note. (Round answers to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation DEBIT CREDIT

1-

2-

3-

4-

B) Prepare the entries to record the recognition of interest each year. (Round answers to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation DEBIT CREDIT

1- To record Interest for year 1

2- To record Interest for year 2

3- To record Interest for year 3

C) Prepare the entry to record the collection of the note at maturity. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.)

Account Titles and explanations

__________

__________

Explanation / Answer

Please find below answer of your question. If this helped, please hit LIKE button.

1 Note Receivable (Present Value) 3890 Accumulated Depreciation (16000-2180) 13820 Profit on sale of equipment 3890-2180 1710 Equipment 16000 2a Note Receivable 311 Interest Income 311 (4900*8%) 2b Note Receivable 336 Interest Income 336 (3890*8%) 2c Note Receivable 363 Interest Income 363 (3890*8%) 3 Cash 4900 Note Receivable 4900

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.