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Accounting & Finance
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Topic Topic: Comprehensive rec prob Post ReplyNew Question
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Horner30
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Posted: 12 May 2007 at 3:43am | IP Logged Quote Horner30

Long Term receivale account balance at 12/21/06

Note Rec from sales of division $1,800.000.00

Note rec from officer:  $400,000.00

I don't even know where to start

Transactions during 2007 and other information related to Connecticut's long-term receivables were as follows:

The $1,800,000 note receivable is dated May 1, 2006, bears interest at 9%, and represents the bal-ance of the consideration received from the sale of Connecticut’s electronics division to New YorkCompany. Principal payments of $600,000 plus appropriate interest are due on May 1, 2007, 2008,and 2009. The first principal and interest payment was made on May 1, 2007. Collection of the noteinstallments is reasonably assured.

The $400,000 note receivable is dated December 31, 2006, bears interest at 8%, and is due on December31, 2009. The note is due from Sean May, president of Connecticut Inc. and is collateralizedby 10,000shares of Connecticut’s common stock. Interest is payable annually on December 31, and all in-terest payments were paid on their due dates thro3.On April 1, 2007, Connecticut sold a patent to Pennsylvania Company in exchange for a $200,000zero-interest-bearing note due on April 1, 2009. There was no established exchange price for thepatent, and the note had no ready market. The prevailing rate of interest for a note of this type atApril 1, 2007, was 12%. The present value of $1 for two periods at 12% is 0.797 (use this factor).The patent had a carrying value of $40,000 at January 1, 2007, and the amortization for the yearended December 31, 2007, would have been $8,000. The collection of the note receivable from Penn-sylvania is reasonably assured.ugh December 31, 2007. The quoted marketprice of Connecticut’s common stock was $45 per share on December 31, 2007.

On April 1, 2007, Connecticut sold a patent to Pennsylvania Company in exchange for a $200,000zero-interest-bearing note due on April 1, 2009. There was no established exchange price for thepatent, and the note had no ready market. The prevailing rate of interest for a note of this type atApril 1, 2007, was 12%. The present value of $1 for two periods at 12% is 0.797 (use this factor).The patent had a carrying value of $40,000 at January 1, 2007, and the amortization for the yearended December 31, 2007, would have been $8,000. The collection of the note receivable from Penn-sylvania is reasonably assured.

On July 1, 2007, Connecticut sold a parcel of land to Harrisburg Company for $200,000 under aninstallment sale contract. Harrisburg made a $60,000 cash down payment on July 1, 2007, andsigned a 4-year 11% note for the $140,000 balance. The equal annual payments of principal andinterest on the note will be $45,125 payable on July 1, 2008, through July 1, 2011. The land couldhave been sold at an established cash price of $200,000. The cost of the land to Connecticut was$150,000. Circumstances are such that the collection of the installments on the note is reasonablyassured.

Instructions:

(a )Prepare the long-term receivables section of Connecticut’s balance sheet at December 31, 2007.
(b) Prepare a schedule showing the current portion of the long-term receivables and accrued inter-est receivable that would appear in Connecticut’s balance sheet at December 31, 2007.
©  Prepare a schedule showing interest revenue from the long-term receivables that would appearon Connecticut’s income statement for the year ended December 31, 2007.



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Horner30
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Posted: 12 May 2007 at 3:44am | IP Logged Quote Horner30

Where do i go to see if anyone can help me on this

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