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2. On January 1, 20x1, Sunset Co. issues a P5,000,000 noninterest- bearing note due on December 31, 20x4. The effective interest rate is 15%. How much is the unamortized balance of the discount on notes payable account on January 1, 20x3? b. 1,219,282 c. 1,712,419 d. 2,141,234 a. 652,174

2. On January 1, 20x1, Sunset Co. issues a P5,000,000 noninterest- bearing note due on December 31, 20x4. The effective interest rate is 15%. How much is the unamortized balance of the discount on notes payable account on January 1, 20x3? b. 1,219,282 c. 1,712,419 d. 2,141,234 a. 652,174

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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Fell Corp. in exchange for a noninterest bearing note requiring December 30. At the date of issuance, the prevailing rate of eight payments of P20,000. The first payment was made on gr December 30, 20X6, and the others are due annually on rate is 15%. How much is the unamortized balance of the 20X6 balance sheet, the note payable to Fell was 6. On December 30, 20X6, Bart, Inc., purchased a machine from 2. On January 1, 20x1, Sunset Co. issues a P5,000,000 noninterest. 4o interest for this type of note was 11%. On Bart's December 31, bearing note due on December 31, 20x4. The effective interest 90 Chapter 2 Notes Payable а. 0 (AICPA) с. 1,320 b. 1,000 d. 2,320 91 b. 4,000,000 a. 3,114,884 с. 3,135,340 d. 3,174,309 a discount on notes payable account on January 1, 20x3? | b. 1,219,282 а. 652,174 c. 1,712,419 d. 2,141,234 The next two items are based on the following information: House Publishers offered a contest in which the winner woul receive P1,000,000, payable over 20 years. On December 31, 200 House announced the winner of the contest and signed a pot payable to the winner for P1,000,000, payable in P50.00m installments every January 2. Also on December 31, 2000, House purchased an annuity for P418,250 to provide the P950,000 prize monies remaining after the first P50,000 installment, which was paid on January 2, 2001. a. 94,240 b. 102,920 c. 104,620 d. 114,240 (AICPA) Use the following information for the next two questions: You finished your studies, passed the CPA board exams, and now an accountant. A real estate company offered to sell you a house with a cash selling price of P14,000,000 under an in-house financing agreement. The amortization will be on a monthly basis over a period of 25 years and the effective interest rate is 12%. You are wondering if you can afford to purchase the house. You estimated your monthly expenditure to be P36,600, which included a risk adjustment allowance. 000.00 COLOA 3. In its December 31, 2000, balance sheet, what amount should House report as note payable-contest winner, net of current sto portion? а. 368,250 b. 418,250 c. 900,000 d. 950,000 7. What should be the minimum balance of your monthly take- home salary so that you will be able to afford to purchase the (AICPA) Hint: An annuity is a financial product, usually sold by fiñancial institutions like insurance companies, wherein you make a lump sum payment or series of payments and, upon you will receive a stream of income payments from the financial institution. annuitization, house? a. 147,451.38 b. 148,051.38 c. 151,048.38 d. 184,051.38 (Hints: PV of 1 @ 1%, n=300 = 0.0505344875; PV of ord. annuity of 1 @1%, n-300 = 94.9465512548) 4. In its 2000 income statement, what should House report as contest prize expense? 8. How much is the total interest expense on the financing agreement? a. 30,235,414 b. 23,335,216 а. 0 b. 418,250 C. 468,250 d. 1,000,000 (AICPA) c. 20,235,414 d. 13,265,992 5. On January 1, 20x1, RELISH TASTE Co. acquired a machine by issuing a 3%, P4,000,000 note due on January 1, 20x Interest is payable semiannually. The effective interest rate l 12%. How much is the carrying amount of the note on inte recognition? * On January 1, 20x1, Next Co. obtains a P4,000,000 bank loan due on December 31, 20x4. Interest of 12% is due annually. The bank charges Next Co. an 11.19% nonrefundable loan
Transcribed Image Text:Fell Corp. in exchange for a noninterest bearing note requiring December 30. At the date of issuance, the prevailing rate of eight payments of P20,000. The first payment was made on gr December 30, 20X6, and the others are due annually on rate is 15%. How much is the unamortized balance of the 20X6 balance sheet, the note payable to Fell was 6. On December 30, 20X6, Bart, Inc., purchased a machine from 2. On January 1, 20x1, Sunset Co. issues a P5,000,000 noninterest. 4o interest for this type of note was 11%. On Bart's December 31, bearing note due on December 31, 20x4. The effective interest 90 Chapter 2 Notes Payable а. 0 (AICPA) с. 1,320 b. 1,000 d. 2,320 91 b. 4,000,000 a. 3,114,884 с. 3,135,340 d. 3,174,309 a discount on notes payable account on January 1, 20x3? | b. 1,219,282 а. 652,174 c. 1,712,419 d. 2,141,234 The next two items are based on the following information: House Publishers offered a contest in which the winner woul receive P1,000,000, payable over 20 years. On December 31, 200 House announced the winner of the contest and signed a pot payable to the winner for P1,000,000, payable in P50.00m installments every January 2. Also on December 31, 2000, House purchased an annuity for P418,250 to provide the P950,000 prize monies remaining after the first P50,000 installment, which was paid on January 2, 2001. a. 94,240 b. 102,920 c. 104,620 d. 114,240 (AICPA) Use the following information for the next two questions: You finished your studies, passed the CPA board exams, and now an accountant. A real estate company offered to sell you a house with a cash selling price of P14,000,000 under an in-house financing agreement. The amortization will be on a monthly basis over a period of 25 years and the effective interest rate is 12%. You are wondering if you can afford to purchase the house. You estimated your monthly expenditure to be P36,600, which included a risk adjustment allowance. 000.00 COLOA 3. In its December 31, 2000, balance sheet, what amount should House report as note payable-contest winner, net of current sto portion? а. 368,250 b. 418,250 c. 900,000 d. 950,000 7. What should be the minimum balance of your monthly take- home salary so that you will be able to afford to purchase the (AICPA) Hint: An annuity is a financial product, usually sold by fiñancial institutions like insurance companies, wherein you make a lump sum payment or series of payments and, upon you will receive a stream of income payments from the financial institution. annuitization, house? a. 147,451.38 b. 148,051.38 c. 151,048.38 d. 184,051.38 (Hints: PV of 1 @ 1%, n=300 = 0.0505344875; PV of ord. annuity of 1 @1%, n-300 = 94.9465512548) 4. In its 2000 income statement, what should House report as contest prize expense? 8. How much is the total interest expense on the financing agreement? a. 30,235,414 b. 23,335,216 а. 0 b. 418,250 C. 468,250 d. 1,000,000 (AICPA) c. 20,235,414 d. 13,265,992 5. On January 1, 20x1, RELISH TASTE Co. acquired a machine by issuing a 3%, P4,000,000 note due on January 1, 20x Interest is payable semiannually. The effective interest rate l 12%. How much is the carrying amount of the note on inte recognition? * On January 1, 20x1, Next Co. obtains a P4,000,000 bank loan due on December 31, 20x4. Interest of 12% is due annually. The bank charges Next Co. an 11.19% nonrefundable loan
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