At year-end, Jovial Company received two P1,000,000 notes receivable fromcustomers in exchange for services rendered.On both note, interest is calculated on the outstanding principal balance at theannual rate of 3% and payable at maturity.The note from Zeta Company, made under customary trade terms, is due in ninemonths and the note from Yola Company is due in five years.The market interest rate for similar notes was 8%.The present value of 1 due in nine months is .944 and the present value of 1 due infive years is .68.At what amount should the note receivable from Zeta Company be reported at year-end?A.1,000,000B.944,000C.965,200O D.972,320 On December 31, 2020, Humility Company sold a machine to another entity inexchange for a noninterest-bearing note requiring ten annual payments of P500,000.the buyer made the first payment on December 31, 2020.The market interest rate for similar notes at date of issuance was 8%Present value of ordinaryannuity of 1 at 10%PeriodsPresent value of 1 at 10%90.506.25100.466.71On December 31, 2020, what is the carrying amount of note receivable?A.2,250,000О В.2,300,000О с.3,125,000O D.3,355,000

1. The right answer is option B.944,000 2 The right answer is option C.3,125,000

Lt year-end, Jovial Company receiv ustomers in exchange for services On both note, interest is calculated nnual rate of 3% and payable at m he note from Zeta Company, mad honths and the note from Yola Cor he market interest rate for similar

Lt year-end, Jovial Company receiv ustomers in exchange for services On both note, interest is calculated nnual rate of 3% and payable at m he note from Zeta Company, mad honths and the note from Yola Cor he market interest rate for similar

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

At year-end, Jovial Company received two P1,000,000 notes receivable from
customers in exchange for services rendered.
On both note, interest is calculated on the outstanding principal balance at the
annual rate of 3% and payable at maturity.
The note from Zeta Company, made under customary trade terms, is due in nine
months and the note from Yola Company is due in five years.
The market interest rate for similar notes was 8%.
The present value of 1 due in nine months is .944 and the present value of 1 due in
five years is .68.
At what amount should the note receivable from Zeta Company be reported at year-
end?
A.1,000,000
B.944,000
C.965,200
O D.972,320

On December 31, 2020, Humility Company sold a machine to another entity in
exchange for a noninterest-bearing note requiring ten annual payments of P500,000.
the buyer made the first payment on December 31, 2020.
The market interest rate for similar notes at date of issuance was 8%
Present value of ordinary
annuity of 1 at 10%
Periods
Present value of 1 at 10%
9
0.50
6.25
10
0.46
6.71
On December 31, 2020, what is the carrying amount of note receivable?
A.2,250,000
О В.2,300,000
О с.3,125,000
O D.3,355,000

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