Global bank loaned P9,000,000 to a borrower on January 1, 2018. The terms of the loan were payment in full on January 1,2023, plus annual interest payment at 12%. The interest payment was made a scheduled on January 1, 2019. However, due to financial setbacks, the borrower was unable to make the 2020 interest payment. The bank considered the loan impaired and projected the cash flows from the loan on December 31, 2020. The bank has accrued the interest on December 31, 2019, but did not continue to accrue interest for 2020 due tot he impairment of the loan. The projected cash flows are: Amount projected on December 31, 2020 1,500,000 2,000,000 2,500,000 Date of cash flow December 31, 2021 December 31, 2022 December 31, 2023 December 31, 2024 3,000,000 The present value of 1 at 12% is .89 for one period, .80 for two periods, .71 for three periods, and .64 for four periods. What is the interest income for 2021? A.795,600 B.900,000 C.180,000 O D.0

Global bank loaned P9,000,000 to a borrower on January 1, 2018. The terms of the loan were payment in full on January 1,2023, plus annual interest payment at 12%. The interest payment was made a scheduled on January 1, 2019. However, due to financial setbacks, the borrower was unable to make the 2020 interest payment. The bank considered the loan impaired and projected the cash flows from the loan on December 31, 2020. The bank has accrued the interest on December 31, 2019, but did not continue to accrue interest for 2020 due tot he impairment of the loan. The projected cash flows are: Amount projected on December 31, 2020 1,500,000 2,000,000 2,500,000 Date of cash flow December 31, 2021 December 31, 2022 December 31, 2023 December 31, 2024 3,000,000 The present value of 1 at 12% is .89 for one period, .80 for two periods, .71 for three periods, and .64 for four periods. What is the interest income for 2021? A.795,600 B.900,000 C.180,000 O D.0

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

1. How much is the impairment loss? 2. What is the AJE to record the loan impairment loss for 2020? 3. What is the carrying value of the loan receivables to be presented in the statement of financial position as of December 31, 2020
On December 31, 2017, Firth Company borrowed $62,092 from Paris Bank, signing a 5-year, $100,000 zero-interest-rate note. The note was issued to yield 10% interest. Unfortunately, during 2019, Firth began to experience financial difficulty. As a result, at December 31, 2019, Paris Bank determined that it was probable that it would collect only $75,000 at maturity. The market rate of interest on loans of this nature is now 11%.Instructions(a) Prepare the entry (if any) to record the impairment of the loan on December 31, 2019, by Paris Bank.(b) Prepare the entry on March 31, 2020, if Paris learns that Firth will be able to repay the loan under the original terms.
On December 31, 2020, Oriole Company has $6,941,000 of short-term debt in the form of notes payable to Gotham State Bank due in 2021. On December 28, 2020, Oriole enters into a refinancing agreement with Gotham that will permit it to borrow up to 52% of the gross amount of its accounts receivable. Receivables are expected to range between a low of $5,949,000 in May to a high of $7,947,000 in October during the year 2021. The interest cost of the maturing short-term debt is 15%, and the new agreement calls for a fluctuating interest at 1% above the prime rate on notes due in 2025. Oriole’s December 31, 2020, balance sheet is issued on February 15, 2021.Prepare a partial balance sheet for Oriole at December 31, 2020, showing how its $6,941,000 of short-term debt should be presented. (Enter account name only and do not provide descriptive information.) ORIOLE COMPANYPartial Balance Sheetchoose the accounting period select…
On December 31, 2019, GMC had a document payable with a value in the $ 100,000 books. GMC has faced economic difficulties that have not allowed to meet the payment of this debt. Suppose that on the date mentioned the The bank agreed to change the terms of the loan as follows: the principal (maturity value) was reduced to $ 80,000, the expiration date was changed to 31 December 2022, and the contractual interest rate was reduced from 15% to 10%. Determine the effect of this restructuring of debt on the Net Income of GMC on 12/31/19. to. GMC is going to report a profit of $ 20,000. b. GMC will report a profit equal to 5% of the principal. c. GMC is going to report a profit of $ 4,000. d. When the terms of the contract are adjusted, the debtor does NOT report earnings.
Rakesh
1. Compute the amount of interest during 2021, 2022, and 2023 for the following note receivable: On May 31, 2021, Washington State Bank loaned $260,000 to Paul Mara on a two-year, 12% note. 2. Which party has a(n): (a) note receivable? (b) note payable? (c) interest revenue? (d) interest expense? 3. How much in total would Washington State Bank collect if Paul Mara paid off the note early on November 30, 2021? 1. Compute the amount of interest during 2021, 2022, and 2023 for the following note receivable: On May 31, 2021, Washington State Bank loaned $260,000 to Paul Mara on a two-year, 12% note. (Round the interest amounts to the nearest whole dollar.) Year 2021 2022 2023 Amount of interest
On December 31, 2014, JKL Bank granted P6,000,000 loan to a borrower with a 10% stated rate payable SEMI-ANNUALLY and maturing in 4 years. The loan was discounted at an interest rate of 12%. Unfortunately, the financial condition of the borrower worsened because of lower revenue. On December 31, 2016, the bank determined that the borrower would pay back only P1,000,000 of the principal at maturity. However, it was considered likely that interest would continue to be paid on the P6,000,000 loan. (Round off PV factor to 4 decimal places) 1. Cash paid to the borrower on December 31, 2014 2. Carrying amount of the loan at December 31, 2016 3. Interest income for the year 2016 4. Impairment loss to be recognized on December 31, 2016 5. Carrying amount of the loan at December 31, 2017
On December 31, 2020, Monty Co. performed environmental consulting services for Hayduke Co. Hayduke was short of cash, and Monty Co. agreed to accept a $296,600 zero-interest-bearing note due December 31, 2022, as payment in full. Hayduke is somewhat of a credit risk and typically borrows funds at a rate of 12%. Monty is much more creditworthy and has various lines of credit at 6%. Prepare the journal entry to record the transaction of December 31, 2020, for the Monty Co. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answers to O decimal places, e.g. 5,275. 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.) Debit Date Account Titles and Explanation Dec. 31, 2020 eTextbook and Media List of Accounts Assuming Monty Co's fiscal year-end is December 31, prepare the journal entry for December 31, 2021. (Round…
Cheyenne Corp. borrowed $1080000 from National Bank on May 31, 2019. The 3-year, 7% note required annual payments of $411536 beginning May 31, 2020. The total amount of interest to be paid over the life of the loan is O $75600. O $154608. O $301688. O $226800.
Groudon Bank loaned P12,000,000 to Kyogre Company on January 1, 2020, the terms of the loan require principal payments of P2,000,000 each year for 6 years plus interest at 6%. The first principal and interest payment is due on December 31, 2020. Kyogre made the required payments on December 31, 2020, and December 31, 2021. However, Kyogre began to experience financial difficulties during 2022 which requires the bank to reassess the collectibility of the loan. On December 31, 2022, the bank determined that the remaining principal payments will be collected but the collection of the interest is unlikely. The bank did not accrue the interest for 2022. Expected Principal Payments December 31, 2024 P4,000,000 December 31, 2025 2,500,000 December 31, 2026 1,500,000 Note: Round off present value factors up to four decimal points; round off the final value up to two decimal points. E.g., 0.7812 and 123,518.25 Questions: How much is the impairment loss to be recorded on December…
For items 15 to 17 BDO Bank loaned P7,500,000 to a borrower on January 1, 2023. The terms of the loan were payment in full on December 31, 2027 plus annual interest payment at 12% beginning December 31, 2023. The interest payment was made as scheduled on December 31, 2023. However, due to financial setbacks, the borrower was unable to make the December 31, 2024 interest payment. The bank considered the loan impaired and projected the cash flows from the loan on December 31, 2024. The bank had accrued the interest on December 31, 2024. Date of cash flow December 31, 2025 December 31, 2026 December 31, 2027 December 31, 2028 Amount projected December 31, 2023 Present value of 1 at 12% P500,000 One period .89 1,000,000 Two periods .80 2,000,000 Three periods.71 4,000,000 Four periods .64 What amount should be recognized as impairment loss for 2024?
On January 1, 2021, Banco de Oro made a 1,000,000 8% loan with interest receivable at the end of each year in the amount of 80,000 and the principal amount to be received at the end of five years. At the end of 2021, the borrower is experiencing financial difficulties so the interest for the first year in the amount of 80,000 has not yet been received. The borrower negotiated a restructuring of the loan. The payment of all of the interest for 5 years will be delayed until the end of the 5-year loan term. In addition, the amount of principal repayment will be dropped from P1,000,000 to P500,000. The PV of 1 at 8% for 4 periods is 0.735. No interest revenue has been recognized in 2021 in connection with the loan. What amount should be reported as interest income for 2022?