TPW, a calendar year taxpayer, sold land with a $535,000 tax basis for $750,000 in February. The purchaser paid $75,000 cash at closing and gave TPW an interest-bearing note for the $675,000 remaining price.
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Headland Corporation borrowed $54,100 on November 1, 2020, by signing a $55,240, 3-month, zero-interest-bearing note. Prepare Headland's November 1, 2020, entry; the December 31, 2020, annual adjusting entry; and the February 1, 2021, entry.
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The net income earned by the cooper, cross, and crane partnership is $18,000. their respective average capital balances are $20,000, $20,000, and $40,000.
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