On April 1, 2020 ZAB 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. If the discounting is secured borrowing, how much is the interest expense included in the transaction to record transaction cost?
On April 1, 2020 ZAB 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. If the discounting is secured borrowing, how much is the interest expense included in the transaction to record transaction cost?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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On April 1, 2020 ZAB 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
Transcribed Image Text:On April 1, 2020 ZAB 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. If the discounting is secured borrowing, how much is the interest expense
included in the transaction to record transaction cost? *
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