3. What is the carrying amount of the modified note payable note payable of P5,000,000 and accrued interest payable of On January 1, 2021, Kingdom Company had an c erdue 10% note payable of P5,000,000 and accrued interest payable P500,000. The entity is granted by the creditor in a debU restructuring agreement the following concessions: a. Accrued interest of P500,000 is forgiven. b. The new interest rate is 14% payable annually every December 31. c. The new maturity date of the note is December 31, 2024. d. The entity paid P290,000 to the creditor as arrangement fee or modifiïcation cost. e. Considering the effect of the modification cost or arrangement fee, the new 'effective interest rate is 12%. f. The market rate of interest for similar note is 9%. 9% 10% 12% PV of 1 for 4 periods PV of an ordinary annuity of 1 for 4 periods 0.71 0.68 0.64 3.24 3.17 3.04 1. What amount of loss on modification should be recognized for 2021? 409,000 b. 119,000 291,000 d. a. с. 2. What amount should be reported as interest expense for 2021? a. 700,000 b. 632,900 c. 561,900 d. 639,480 on December 31, 2021? a. 5,268,480 b. 5,480,900 c. 5,329,000 d. 5,000,000

3. What is the carrying amount of the modified note payable note payable of P5,000,000 and accrued interest payable of On January 1, 2021, Kingdom Company had an c erdue 10% note payable of P5,000,000 and accrued interest payable P500,000. The entity is granted by the creditor in a debU restructuring agreement the following concessions: a. Accrued interest of P500,000 is forgiven. b. The new interest rate is 14% payable annually every December 31. c. The new maturity date of the note is December 31, 2024. d. The entity paid P290,000 to the creditor as arrangement fee or modifiïcation cost. e. Considering the effect of the modification cost or arrangement fee, the new 'effective interest rate is 12%. f. The market rate of interest for similar note is 9%. 9% 10% 12% PV of 1 for 4 periods PV of an ordinary annuity of 1 for 4 periods 0.71 0.68 0.64 3.24 3.17 3.04 1. What amount of loss on modification should be recognized for 2021? 409,000 b. 119,000 291,000 d. a. с. 2. What amount should be reported as interest expense for 2021? a. 700,000 b. 632,900 c. 561,900 d. 639,480 on December 31, 2021? a. 5,268,480 b. 5,480,900 c. 5,329,000 d. 5,000,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Metlock Corporation factors $251,700 of accounts receivable with Kathleen Battle Financing, Inc. on a with recourse basis. Kathleen Battle Financing will collect the receivables. The receivables records are transferred to Kathleen Battle Financing on August 15, 2025. Kathleen Battle Financing assesses a finance charge of 2% of the amount of accounts receivable and also reserves an amount equal to 4% of accounts receivable to cover probable adjustments. (b) Assume that the conditions are met for a transfer of receivables with recourse to be accounted for as a sale. Prepare the journal entry on August 15, 2025, for Metlock to record the sale of receivables, assuming the recourse obligation has a fair value of $5,010. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries.) Date Aug. 15, 2025 Account…
XYZ Company is a dealer of equipment. On January 1 2020, the entity sold an equipment in exchange for non-interest bearing note requiring three annual payments of P500,000. The first payment was made on December 31, 2020. The market interest rate for similar notes was 9% PV of 1 at 9% for 3 periods 0.772183 PV of an ordinary annuity of 1 at 9% for 3 periods 2.531295 Required: a. Complete the amortization table Date Annual Collection Interest Income Principal Present Value Jan 1, 2020 1,265,647.33 Dec. 31 2020 _____________ _____________ _________ ___________ Dec. 31 2021 _____________ _____________ __________ ___________ Dec. 31 2022 ______________ _____________ __________ 0.00 b. Provide the journal entries to record the sale of equipment on January 1,…
On December 31, 2023, Green Bank enters into a debt restructuring agreement with Teal Mountain Inc., which is now experiencing financial trouble. The bank agrees to restructure a $2.1-million, 10% note receivable issued at par by the following modifications: 1. Reducing the principal obligation from $2.1 million to $2.00 million Extending the maturity date from December 31, 2023, to December 31, 2026 3. Reducing the interest rate from 10% to 8% 2. Teal Mountain pays interest at the end of each year. On January 1, 2027, Teal Mountain pays $2.00 million in cash to Green Bank. Teal Mountain prepares financial statements in accordance with IFRS 9. (b) Prepare an entry at December 31, 2023, based on the results of your calculation. (Round answers to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List debit entry…
XYZ Company is a dealer of equipment. On January 1 2020, the entity sold an equipment in exchange for non-interest bearing note requiring three annual payments of P500,000. The first payment was made on December 31, 2020. The market interest rate for similar notes was 9% PV of 1 at 9% for 3 periods 0.772183 PV of an ordinary annuity of 1 at 9% for 3 periods 2.531295 Required: a. Complete the amortization table Date Annual Collection Interest Income Principal Present Value Jan 1, 2020 __ 1,265,647.33 Dec. 31 2020 _____________ _____________ _________ ___________ Dec. 31 2021 _____________ _____________ __________ ___________ Dec. 31 2022 ______________ _____________ __________ 0.00 b. Provide the journal entries to record the sale of equipment on January 1,…
On July 1, 2018, ABC Company borrowed P1,000,000 on a 10% five-year note payable. OnDecember 31, 2018, the fair value of the note is determined to be P975,000 based on marketand interest factors. The entity has elected the fair value option for reporting the financialliability.Compute the following and show your solution:a. Interest expense for 2018b. carrying amount of the note payable on December 31, 2018
On April 1, 2020 JKL Company discounted with recourse a 9-month, 10% note dated January 1, 2020 with face amount of P6,000,000. The bank discount rate is 12%. The discounting transaction is accounted for as a conditional sale with recognition of contingent liability. On October 1, 2020, the maker dishonored the note receivable. The entity paid the bank the maturity value of the note plus protest fee of P50,000. On December 31, 2020, the entity collected the dishonored note receivable in full plus 12% annual interest on the total amount due. What is the total amount collected from the customer on December 31, 2020?
Show solutions Hope World Company factored Php600,000 of accounts receivable to Hangsang Company on July 1, 2021. Control was surrendered by Hope World. Hangsang accepted the receivables subject to recourse for nonpayment. Hagsang assessed a fee of 2% and retains a holdback equal to 5% of the accounts receivable. the fair value of the recourse obligation is Php12,000. 17. Hope World will receive and record cash of a.Php546,000 b. Php558,000 c. Php570,000 d. Php576,000 What amount of loss on factoring should Hope World company recognize? a. None b. 12,000 c. 24,000 d. 42,000
Good Company has an overdue 8% notes payable to Better Company amounting to P8million and accrued interest for one year of P640,000. as a result of restructuring agreement on January 1, 2021, both parties agreed to the following provisions:* the principal obligation is reduced to P7,000,000* the accrued interest is forgiven* the date of maturity is extended to December 31, 2024* annual interest of 10% is to be paid in 4 years every December 31The prevailing rate of interest remained at 8%. The PV of 1 at 8% for 4 periods is 0.735 and the PV of an ordinary annuity of 1 at 8% for 4 periods is 3.31. How much is the gain on debt restructuring? a. P1,640,000 b. P1,178,000 c. P1,000,000 d. P538,000
At January 1, 2024, Clayton Hoists Incorporated owed Third BancCorp $20 million, under a 10% note due December 31, 2025. Interest was paid last on December 31, 2022. Clayton was experiencing severe financial difficulties and asked Third BancCorp to modify the terms of the debt agreement. After negotiation Third BancCorp agreed to do the following: Note: Use appropriate factor(s) from the tables provided. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) • Forgive the interest accrued for the year just ended. • Reduce the remaining two years' interest payments to $1 million each. • Reduce the principal amount to $19 million. Required: 1-3. Prepare the journal entries by Third BancCorp necessitated by the restructuring of the debt at January 1, 2024, December 31, 2024 and December 31, 2025. Note: Enter your answers in whole dollars. If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your final answers…
29.On September 12, 2021, an entity received a 120-day, 9% note for P50,000 for an overdue account from a customer. The entity uses an accounting year that ends on December 31. Which of the following statements is true? Use 360-day year.A. The maturity date of the note is January 12, 2022.B. The maturity value of the note is P51,500.C. Accrued interest on the note at December 31, 2021 is P1,375. a. A, B, and C b. A and B only c. B and C only d. B only
Listed below are the current liability section and Note 7 of the Year 7 balance sheet of Joli Roma Corporation (the Company), a major oil company. $ millions Year 7 Year 6 Current Liabilities Current portion of long-term obligations Short-term obligations Accounts payable Accrued liabilities Taxes payable (including income taxes) $175 $89 691 530 2,996 3,196 1,046 1,099 1,289 997 $6,197 $5,911 Note 7 Short-Term Obligations The Company's "short-term obligations" consist of notes payable and commercial paper. Notes payable as of December 31, Year 7, totaled $102 million at an average annual interest rate of 5.7%, compared with $29 million at an average annual interest rate of 5.7% at year-end Year 6. Commercial paper borrowings at December 31, Year 7, were $839 million at an average annual interest rate of 5.7% compared with $260 million at an average annual interest rate of 5.9% as of December 31, Year 6. Bank lines of credit available to support existing commercial paper borrowings of…
On December 31, 2021, Chang Company sold a machine in the ordinary course of business to Door Company in exchange for a noninterest bearing note requiring ten annual payments of P1,000,000. The entity made the first payment on December 31, 2021. The market interest rate for similar notes at date of issuance was 8%. PV of an ordinary annuity of 1 at 8% for 9 periods 6.25 PV of an ordinary annuity of 1 at 8% for 10 periods 6.71 4. What is the carrying amount of the note receivable on December 31, 2022? a. 8,000,000 b. 6,750,000 с. 5,250,000 d. 5,750,000