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11. Noncurrent receivables as of December 31, 2020 12. Current portion of long-term receivables as of December 31, 2020

11. Noncurrent receivables as of December 31, 2020 12. Current portion of long-term receivables as of December 31, 2020

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The balance sheet of Tulip Corporation reported the following long-term receivables as of December 31, 2019: Note receivable from sale of plant Note receivable from officer P6,000,000 1,600,000 In connection with your audit, you were able to gather the following transactions during 2020 and other information pertaining to the company's long-term receivables: The note receivable from sale of plant bears interest at 12% per annum. The note is payable in 3 annual installments of P2,000,000 plus interest on the unpaid balance every April 1. The initial principal and interest payment was made on April 1, 2020. a. b. The note receivable from officer is dated December 31, 2019, earns interest at 10% per annum, and is due on December 31, 2022. The 2020 interest was received on December 31, 2020. The corporation sold a piece of equipment to Yes, Inc. on April 1, 2020, in exchange for an P800,000 non-interest bearing note due on April 1, 2022. The note had no ready market, and there was no established exchange price for the equipment. The prevailing interest rate for a note of this type at April 1, 2020, was 12%. The present value factor of 1 for two periods at 12% is 0.797. C. d. A tract of land was sold by the corporation to No Co. on July 1, 2020, for P4,000,000 under an installment sale contract. No Co. signed a 4-year 11% note for P2,800,000 on July 1, 2020, in addition to the down payment of P1,200,000. The equal annual payments of principal and interest on the note will be P902,500 payable on July 1, 2021, 2022, 2023,and 2024. The land had an established cash price of P4,000,000, and its cost to the corporation was P3,000,000. The collection of the installments on this note is reasonably assured. 11. Noncurrent receivables as of December 31, 2020 12. Current portion of long-term receivables as of December 31, 2020
Transcribed Image Text:The balance sheet of Tulip Corporation reported the following long-term receivables as of December 31, 2019: Note receivable from sale of plant Note receivable from officer P6,000,000 1,600,000 In connection with your audit, you were able to gather the following transactions during 2020 and other information pertaining to the company's long-term receivables: The note receivable from sale of plant bears interest at 12% per annum. The note is payable in 3 annual installments of P2,000,000 plus interest on the unpaid balance every April 1. The initial principal and interest payment was made on April 1, 2020. a. b. The note receivable from officer is dated December 31, 2019, earns interest at 10% per annum, and is due on December 31, 2022. The 2020 interest was received on December 31, 2020. The corporation sold a piece of equipment to Yes, Inc. on April 1, 2020, in exchange for an P800,000 non-interest bearing note due on April 1, 2022. The note had no ready market, and there was no established exchange price for the equipment. The prevailing interest rate for a note of this type at April 1, 2020, was 12%. The present value factor of 1 for two periods at 12% is 0.797. C. d. A tract of land was sold by the corporation to No Co. on July 1, 2020, for P4,000,000 under an installment sale contract. No Co. signed a 4-year 11% note for P2,800,000 on July 1, 2020, in addition to the down payment of P1,200,000. The equal annual payments of principal and interest on the note will be P902,500 payable on July 1, 2021, 2022, 2023,and 2024. The land had an established cash price of P4,000,000, and its cost to the corporation was P3,000,000. The collection of the installments on this note is reasonably assured. 11. Noncurrent receivables as of December 31, 2020 12. Current portion of long-term receivables as of December 31, 2020
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