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121.On January 1, 2017, Casey Company acquires a 30% interest in Hill Company by purchasing 6,000…

by Essaynice Tutors | Sep 9, 2023 | accounting

121.On January 1, 2017, Casey Company acquires a 30% interest in Hill Company by purchasing 6,000 shares of its 20,000 common stock for $16 per share. On January 1, 2017, the net assets of Hill Company were as follows:

	Book Value	Fair Value
Nondepreciable assets	$ 60,000	$ 60,000
Depreciable assets (5-year remaining life)	200,000	240,000
	$260,000	$300,000

Liabilities	$ 20,000	$ 20,000

During 2017, Hill reported net income of $200,000 and paid cash dividends of $80,000.
Required:
Prepare all journal entries on Casey's books to record the acquisition, dividends, and income from the investment in Hill Company.

122.On January 1, 2017 Chester sold land to Melissa's Company, accepting a 3-year $75,000 non-interest-bearing note due in three equal installments of $25,000 beginning December 31, 2017. The land had a book value of $55,000, the fair value for the land was not determinable. An appropriate interest rate for a note of this caliber is 9%.

Required:

Prepare the journal entries on Chester's books to record:

1) the sale

2) the annual interest income and receipt of each $25,000 installment