On April 1, 2020, Aljean 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. 1. What amount was received from the note receivable discounting on April 1, 2020? a. 6,063,000 b. 6,450,000 c. 6,150,000 d. 5,963,000 2. What amount should be recognized as loss on note receivable discounting? 450,000 b. 387,000 87,000 а. с. d. 63,000 3. What is the total amount collected from the customer on December 31, 2020? a. 6,450,000 b. 6,500,000 c. 6,695,000 d. 6,662,500 4. If the discounting is secured borrowing, what is included in the journal entry to record the transaction? a. Debit loss on note receivable discounting P87,000 b. Debit interest expense P87,000 c. Credit liability for note discounted P6,063,000 d. Credit interest income P63,000

On April 1, 2020, Aljean 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. 1. What amount was received from the note receivable discounting on April 1, 2020? a. 6,063,000 b. 6,450,000 c. 6,150,000 d. 5,963,000 2. What amount should be recognized as loss on note receivable discounting? 450,000 b. 387,000 87,000 а. с. d. 63,000 3. What is the total amount collected from the customer on December 31, 2020? a. 6,450,000 b. 6,500,000 c. 6,695,000 d. 6,662,500 4. If the discounting is secured borrowing, what is included in the journal entry to record the transaction? a. Debit loss on note receivable discounting P87,000 b. Debit interest expense P87,000 c. Credit liability for note discounted P6,063,000 d. Credit interest income P63,000

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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