CPA Co. received from a customer a one-year, P1,000,000 note bearing annual interest of 10%. After holding the note for three months, the entity discounted the note at the bank at an effective interest rate of 12%. The customer paid the bank in full at maturity date. Compute the loss on note receivable discounting assuming the endorsement is without recourse.

CPA Co. received from a customer a one-year, P1,000,000 note bearing annual interest of 10%. After holding the note for three months, the entity discounted the note at the bank at an effective interest rate of 12%. The customer paid the bank in full at maturity date. Compute the loss on note receivable discounting assuming the endorsement is without recourse.

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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Question

CPA Co. received from a customer a one-year, P1,000,000 note bearing annual
interest of 10%. After holding the note for three months, the entity discounted
the note at the bank at an effective interest rate of 12%. The customer paid the
bank in full at maturity date. Compute the loss on note receivable discounting
assuming the endorsement is without recourse.

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