On April 1, 2020 XYZ 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. What is the total amount collected from the customer on December 31, 2020? * On April 1, 2020 XYZ Company discounted with recourse a 9-month, 10% notedated January 1, 2020 with face amount of P6,000,000. The bank discount rateis 12%. The discounting transaction is accounted for as a conditional sale withrecognition of contingent liability. On October 1, 2020, the maker dishonored thenote receivable. The entity paid the bank the maturity value of the note plusprotest fee of P50,000. On December 31, 2020, the entity collected thedishonored note receivable in full plus 12% annual interest on the total amountdue. What is the total amount collected from the customer on December 31,2020? *Your answer

Interest amount=P6000000×0.10×912=P350,000

Answered: On April 1, 2020 XYZ Company discounted…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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On April 1, 2020 XYZ 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. What is the total amount collected from the customer on December 31, 2020? *

Definition Definition Costs that a business is responsible for paying, should a particular event potentially occur in the future. Also called a potential liability, a contingent liability is generally recorded only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly. The Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Principles (IFRS) make it mandatory for the companies to record any contingent liability taking the principles of full disclosure, materiality, and prudence into consideration.

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