Notes Payable account
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Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
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- On July 1, 2019, Aldrich Company purchased as an available-for-sale security 200,000 face value, 9% U.S. Treasury notes for 194,000. The notes mature July 1, 2020, and pay interest semiannually on January 1 and July 1. The notes were sold on December 1, 2019, for 199,000. Aldrich normally uses straight-line amortization on all of its notes. In its income statement for the year ended December 31, 2019, what amount should Aldrich report as a gain on the sale of the available-for-sale security? a. 2,500 b. 3,500 c. 5,000 d. 6,000On January 1, 2021, Marigold Corp. sold property to Cullumber Company which originally cost Marigold $2760000. There was no established exchange price for this property. Cullumber gave Marigold a $4170000 zero-interest-bearing note payable in three equal annual installments of $1390000 with the first payment due December 31, 2021. The note has no ready market. The prevailing rate of interest for a note of this type is 10%. The present value of a $4170000 note payable in three equal annual installments of $1390000 at a 10% rate of interest is $3456930. What is the amount of interest income that should be recognized by Marigold in 2021, using the effective-interest method? $417000. $0. $139000. $345693.On January 1, 2024, Whispering Winds Company sold property to Oriole Company which originally cost Whispering Winds $2640000. There was no established exchange price for this property. Oriole gave Whispering Winds a $4050000 zero - interest - bearing note payable in three equal annual installments of $1350000 with the first payment due December 31, 2024. The note has no ready market. The prevailing rate of interest for a note of this type is 10% . The present value of a $4050000 note payable in three equal annual installments of $1350000 at a 10% rate of interest is $3357250. What is the amount of interest income that should be recognized by Whispering Winds in 2024 if the effective - interest method is used? Select answer from the options below a. $405000 b. $135000 c. $0 d. $335725
- On January 1, 2021, ABC Company sold property to the DEF Company. There was no established exchange price for the property, and DEF gave ABC a P2,000,000 non-interest bearing note payable in 5 equal annual installments of P400,000, with the first payment due December 31, 2021. The prevailing rate of interest for a note of this type is 9%.What amount from the carrying value of the notes shall be presented as part of the non-current liabilities as of December 31,2023? P 703,644.47 P 336,672.00 P 366,972.48 P 308,873.39On January 1, 2021, ABC Company sold property to the DEF Company. There was no established exchange price for the property, and DEF gave ABC a P2,000,000 non-interest bearing note payable in 5 equal annual installments of P400,000, with the first payment due December 31, 2021. The prevailing rate of interest for a note of this type is 9%. What amount from the carrying value of the notes shall be presented as part of the non-current liabilities as of December 31,2023?On January 1, 2021, Gobert Company sold property to Beasley Company. There was no established exchange price for the property, and Beasley gave Gobert a $751,000 zero-interest- bearing note payable on January 1, 2025. The prevailing rate of interest for a note of this type is 6%. The property had a book value of $341,000 to Gobert. What should be the balance of the Discount on Notes Payable account on the books of Beasley at December 31, 2021 after adjusting entries are made, assuming that the effective-interest method is used?
- On January 1, 2020, ABC Company sold property to the DEF Company. There was no established exchange price for the property, and DEF gave ABC a P2,000,000 non-interest bearing note payable in 5 equal annual installments of P400,000, with the first payment due December 31, 2020. The prevailing rate of interest for a note of this type is 9%.What should be the balance of the Discount on Notes Payable account on the books of DEF at December 31, 2021 after adjusting entries are made assuming that the effective interest method is used? A. P-0- B. P 444,139.49 C. P 187,482.13 D. P 304,112.05On January 1, 2020, ABC Company sold property to the DEF Company. There was no established exchange price for the property, and DEF gave ABC a P2,000,000 non-interest bearing note payable in 5 equal annual installments of P400,000, with the first payment due December 31, 2020. The prevailing rate of interest for a note of this type is 9%.What should be the balance of the Discount on Notes Payable account on the books of DEF at December 31, 2021 after adjusting entries are made assuming that the effective interest method is used? A. 0 B. 444,139.49 C.187,482.13 D. 304,112.05On January 1, 2019, Bestbuy Inc. purchased land that had an assessed value of P6,000,000 at the time of purchase. AP9,000,000 non-interest-bearing note due January 1, 2021 was given in exchange. There was no established exchangeprice for the land, nor a ready market value for the note. The interest rate charged on a note of this type is 12%. The present value of 1 at 12% for 3 periods is 0.7118. The present value of an annuity of 1 at 12 % for 3 periods is 2.4018. In its December 31, 2019 balance sheet, what carrying amount should Bestbuy report as Note payable?a. P7,270,800 c. P8,070,048b. P7,174,944 d. P9,000,000
- On January 1, 2022, Jantzen Company sold land to Dansko Company. There was no established market price for the land. Dansko gave Jantzen a P2,400,000 Zero-interest-bearing note payable in three equal annual installments of P800,000 with the first payment due December 31, 2022. The note has no ready market. The prevailing rate of interest for a note of this type is 10%. The present value of a P2,400,000 note payable in three equal annual installments of P800,000 at a 10% rate of interest is P1,989,600. The note will be reported on Dansko’s 2022 statement of financial position at a carrying value of P2,400,000 P2,188,560 P2,126,400 P1,388,560On January 1, 2019, Erwan Company sold land to Heaven Company. There was no established market price for the land. heaven gave Erwan a P2,400,000 noninterest bearing note payable in three equal annual installments of P800,000 with the first payment due December 31, 2019. The note has no ready market. The prevailing rate of interest for a note of this type is 10%. The present value of a P2,400,000 note payable in three equal annual installments of P800,000 at a 10% rate of interest is P1,989,600. On January 1, 2019, how much should note payable be credited? A. 2,400,000B. 800,000C. 3,200,000D. P1,989,600On January 1,2021, ABC Corporation purchased a land for P 15,000,000. In exchange of the land, ABC issued a non-interest bearing note which is due on December 31,2025. There is no readily available market value for the building, but the current market rate of interest for comparable notes is 15%How much is the balance of Discount on notes payable as of December 31,2024?