60.1K

Verified Solution

Link Copied!

3. On May 1, 2019, Blanton's Corp. purchased equipment. a. The equipment had a list price of $220,000. Because it was a favored customer of the dealer, the dealer discounted the price to Blanton's by $5%. The dealer also offered to finance 90% of the total after-discount price plus the sales tax at the rate of 6.0% for 18 months at a rate of 2.4% per year. No payments are due on the note until it matures. Blanton's accepted those terms, signed the corresponding note payable, and delivered cash for the amount not financed. b. In addition to the amounts noted above, Blanton's paid in cash shipping charges of $1,240, installation charges of $1,100, and $2,350 to repair damage to the equipment that occurred between the time it was delivered and the time it was installed. Once the equipment was operational, Blanton's spent $2,150 for print and radio advertising to raise awareness of the advanced capabilities the new equipment allowed it to provide its customers. i. Prepare the journal entry for each of items a. through c. ii. What is Blanton's cost of the equipment for financial reporting purposes? iii. Assume the answer to ii. is $225,000. How much depreciation expense will Blanton's record in 2019 and 2020 if it uses straight-line method and the half-year convention? How much depreciation expense will Blanton's record in 2019 and 2020 if it uses the double declining balance method and the half-year convention. iv. What year-end 2019 adjusting entry is required for the note payable assuming that Blanton's accrues interest only at year end? v. Is the note payable a current liability or long-term liability at December 31, 2019? Explain your answer. 3. On May 1, 2019, Blanton's Corp. purchased equipment. a. The equipment had a list price of $220,000. Because it was a favored customer of the dealer, the dealer discounted the price to Blanton's by $5%. The dealer also offered to finance 90% of the total after-discount price plus the sales tax at the rate of 6.0% for 18 months at a rate of 2.4% per year. No payments are due on the note until it matures. Blanton's accepted those terms, signed the corresponding note payable, and delivered cash for the amount not financed. b. In addition to the amounts noted above, Blanton's paid in cash shipping charges of $1,240, installation charges of $1,100, and $2,350 to repair damage to the equipment that occurred between the time it was delivered and the time it was installed. Once the equipment was operational, Blanton's spent $2,150 for print and radio advertising to raise awareness of the advanced capabilities the new equipment allowed it to provide its customers. i. Prepare the journal entry for each of items a. through c. ii. What is Blanton's cost of the equipment for financial reporting purposes? iii. Assume the answer to ii. is $225,000. How much depreciation expense will Blanton's record in 2019 and 2020 if it uses straight-line method and the half-year convention? How much depreciation expense will Blanton's record in 2019 and 2020 if it uses the double declining balance method and the half-year convention. iv. What year-end 2019 adjusting entry is required for the note payable assuming that Blanton's accrues interest only at year end? v. Is the note payable a current liability or long-term liability at December 31, 2019? Explain your

Answer & Explanation Solved by verified expert

See Answer