By December 31, 2017, Swifty Corporation had performed a significant amount of e

Question

By December 31, 2017, Swifty Corporation had performed a significant amount of environmental consulting services for Wildhorse Co.. Wildhorse Co. was short of cash, and Swifty Corporation agreed to accept a $183,000, non–interest-bearing note due December 31, 2019, as payment in full. Wildhorse Co. is a bit of a credit risk and typically borrows funds at a rate of 15%. Swifty Corporation is much more creditworthy and has various lines of credit at 9%. Swifty Corporation reports under IFRS. The tables in this problem are to be used as a reference for this problem.

A) Prepare the journal entry to record the transaction on December 31, 2017, for Swifty Corporation (For calculation purposes, use 5 decimal places as displayed in the factor table provided. 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

___________________

___________________

B) Assuming Swifty Corporation’s fiscal year end is December 31, prepare the journal entry required at December 31, 2018. (For calculation purposes, use 5 decimal places as displayed in the factor table provided. 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

___________________

___________________

C) Assuming Swifty Corporation’s fiscal year end is December 31, prepare the journal entry required at December 31, 2019. (Round answers to 0 decimal places, e.g. 58,971. 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

__________________

__________________

(To record interest)

________________

_________________

(To record notes)

D) What are the amount and classification of the note on Swifty Corporation’s statement of financial position as at December 31, 2018? (Round answer to 0 decimal places, e.g. 58,971.)

The balance of the note at December 31, 2018 $_______________

The note would be classified as a / an (current asset, non current asset, current liability, non current liability, equity) on the statement of financial position.

E) Assume instead that Swifty Corporation reports under ASPE and uses the straight-line method to amortize the discount on the note. What would the interest income be relating to the note for 2018 and 2019? (Round answer to 0 decimal places, e.g. 58,971.)

Interest Income for 2018 $_____________

Interest Income for 2019 $______________

Explanation / Answer

Date Accounts Title Dr Cr 31-Dec-17 Notes receivable $183,000 Discount on Notes Receivable $44,626 Service revenue 138374 working Service revenue (183000*PVIF(15%,2)) 183000*.75614 138374 ans b 31-Dec-18 Discount on Notes Receivable 20756 Interest Revenue (138374*15%) 20756 ans c 31-Dec-19 Discount on Notes Receivable $23,870 Interest Revenue (44626-20756) $23,870 Cash $183,000 Notes receivable $183,000 ans d The balance of the note at December 31, 2018 (183000-20756) 162244 ans e Interest Income 2018 20756 Interest Income 2019 $23,870

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