(c).Determine the loss on impairment that Culver Bank should recognize on December 31, 2022. (Round present value factors to 5decimal places, e.g. 0.52500 and final answer to O decimal places, e.g. 5,275.)Loss due to impairmenteTextbook and MediaSave for LaterDate12/31/20Prepare a note amortization schedule for Culver Bank up to December 31, 2022. (Round answers to O decimal places, e.g. 5,275.)12/31/2112/31/22$$Current Attempt in ProgressCashReceived9207992079$Note Amortization Schedule(Before Impairment)InterestRevenueAttempts: 0 of 3 usedI$Submit AnswerIncrease inCarryingAmountCarryAmourNotOn December 31, 2020, Flounder Company signed a $1,023,100 note to Culver Bank. The market interest rate at that time was 11%.The stated interest rate on the note was 9%, payable annually. The note matures in 5 years. Unfortunately, because of lower sales,Flounder's financial situation worsened. On December 31, 2022, Culver Bank determined that it was probable that the companywould pay back only $613,860 of the principal at maturity. However, it was considered likely that interest would continue to be paid,based on the $1,023,100 loan.

Note receivable refers to a written promise for the amounts to be received within a stipulated…

On December 31, 2020, Flounder Company signed a $1,023,100 note to Culver Bank. The market interest rate at that time was 11%. The stated interest rate on the note was 9%, payable annually. The note matures in 5 years. Unfortunately, because of lower sales, Flounder's financial situation worsened. On December 31, 2022, Culver Bank determined that it was probable that the company would pay back only $613,860 of the principal at maturity. However, it was considered likely that interest would continue to be paid, based on the $1,023,100 loan.

On December 31, 2020, Flounder Company signed a $1,023,100 note to Culver Bank. The market interest rate at that time was 11%. The stated interest rate on the note was 9%, payable annually. The note matures in 5 years. Unfortunately, because of lower sales, Flounder's financial situation worsened. On December 31, 2022, Culver Bank determined that it was probable that the company would pay back only $613,860 of the principal at maturity. However, it was considered likely that interest would continue to be paid, based on the $1,023,100 loan.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Lowlife Company defaulted on a $200,000 loan that was due on December 31, 2024. The bank has agreed to allow Lowlife to repay the $200,000 by making a series of equal annual payments beginning on December 31, 2025. Required: 1. Calculate the required annual payment of the bank's Interest rate is 10% and four payments are to be made. 2. Calculate the required annual payment of the bank's Interest rate is 8% and five payments are to be made. 3. If the bank's Interest rate is 10%, how many annual payments of $28,156 would be required to repay the debt? 4. If three payments of $72,070 are to be made, what interest rate is the bank charging Lowlife? Note: For all requirements, Use tables, Excel, or a financial calculator. (FV of $1. PV of $1. FVA of $1. PVA of $1, FVAD of $1 and PVAD of $1) Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Calculate the required annual payment if the bank's interest rate is 10% and four payments…
Buffalo Limited owes $300,000 to Kingbird Inc. on a 10-year, 12% note due on December 31, 2020. The note was issued at par. Because Buffalo is in financial trouble, Kingbird Inc. agrees to extend the maturity date to December 31, 2022, reduce the principal to $250,000, and reduce the interest rate to 5%, payable annually on December 31. The market rate is currently 5%. Buffalo prepares financial statements in accordance with IFRS. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1. Using (1) factor tables, (2) a financial calculator, or (3) Excel function PV, prepare the journal entries on Buffalo's books on December 31, 2020, 2021, and 2022. (Hint: Refer to Chapter 3 for tips on calculating.) (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to O decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered.…
On December 31, 2020, JKL Bank granted a P5,000,000 loan to a borrower with 10% stated rate payable annually and maturing in 5 years. The loan was discounted at the market interest rate of 12%. Unfortunately, the financial condition of the borrower worsened because of lower revenue. On December 31 ,2022, the bank determined that the borrower would pay back only P3,000,000 of the principal at maturity. However, it was considered likely that interest would continue to be paid on the P5,000,000 loan. The present value of 1 at 12% is 0.57 for five periods and 0.71 for three periods. In addition, the present value of an ordinary annuity of 1 at 12% is 3.60 for five periods and 2.40 for three periods. Compute for the carrying amount of the loan receivable on December 31, 2022.
The Schitt Company borrowed $900 on January 1, 2020 at an annual rate of interest of eight percent. The loan has a three-year term and the company will not make any payments until the end of the term. What amount of interest expense will the company record on December 31, 2022? Round your final answer to the nearest whole dollar and enter as a positive number.
On December 31, 2020, Stellar Company signed a $ 1,022,000 note to Pearl Bank. The market interest rate at that time was 11%. The stated interest rate on the note was 9%, payable annually. The note matures in 5 years. Unfortunately, because of lower sales, Stellar’s financial situation worsened. On December 31, 2022, Pearl Bank determined that it was probable that the company would pay back only $ 613,200 of the principal at maturity. However, it was considered likely that interest would continue to be paid, based on the $ 1,022,000 loan.
On December 31, 2021, London Bank granted a P5,000,000 loan to a borrower with 10% stated rate payable annually and maturing in 5 years. The loan was discounted at the market interest rate of 12%. Unfortunately, the financial condition of the borrower worsened because of lower revenue. On December 31, 2023, the bank determined that the borrower would pay back only P3,000,000 of the principal at maturity. However, it was considered likely that interest would continue to be paid on the P5,000,000 loan. The present value of 1 at 12% is .57 for five periods and .71 for three periods. The present value of an ordinary annuity of 1 at 12% is 3.60 for five periods and 2.40 for three periods. What is the impairment loss to be recognized on December 31, 2023? a. 2,000,000 O b. 1,442,960 O c. 1,922,960 O d. 1,670,000
Max Corp. sold goods for $36,000 on July 17, 2020, and accepted a 12%, 90-day note. On August 1, the note was sold to a bank at a 15% discount rate. Required: a. Compute the proceeds. Assume a 360-day year. b. If the maker dishonored the note at maturity, prepare the entry for Max Corp. assuming $75 of bank protest fees. If an amount box does not require an entry, leave it blank.
The Electric Car Corporation borrowed $3,000,000 from the Bank of Walnut Creek on October 1, 2021. The loan was from an SBA (Small Business Administration) program that required interest only payments annually at the low rate of 1.75%. At the end of 5 years, on October 1, 2026 the entire loan of $3,000,000 must be repaid. In the event it is not repaid, the interest rate of 1.75% will be increased retroactively at a rate of 7.5%. In order to assure that the loan can be repaid on October 1, 2026, the Chief Financial Officer wants to set up a special fund to contribute to each and every year in order to have sufficient funds to repay the loan in full on October 1, 2026. The Investment firm of J. Edward and Associates of Emeryville, California has an investment fund available that has an annual fixed return of 5%. The Electric Car Corporation wants to start making an annual deposit to the fund beginning in one year starting on October 1, 2022, and for each of the next three years of…
On December 31, 2020, JKL Bank granted a P5,000,000 loan to a borrower with 10% stated rate payable annually and maturing in 5 years. The loan was discounted at the market interest rate of 12%. Unfortunately, the financial condition of the borrower worsened because of lower revenue. On December 31 ,2022, the bank determined that the borrower would pay back only P3,000,000 of the principal at maturity. However, it was considered likely that interest would continue to be paid on the P5,000,000 loan. The present value of 1 at 12% is 0.57 for five periods and 0.71 for three periods. In addition, the present value of an ordinary annuity of 1 at 12% is 3.60 for five periods and 2.40 for three periods. Compute for the impairment loss on loan receivable to be recognized in 2022?
Kalibo Bank loaned P5,000,000 to Caticlan Company on January 1, 2021. The terms of the loan require principal payments of P 1,000,000 each year for 5 years plus interest at 8%. The first principal and interest payment is due on January 1, 2021. Caticlan Company made the required payments during 2022 and 2023. However, during 2023 Caticlan Company began to experience financial difficulties, requiring the Kalibo bank to reassess the collectibility of the loan. On December 31, 2020, the Kalibo bank has determined that the remaining principal payment will be collected as originally scheduled but the collection of the interest is unlikely. Kalibo Bank did not accrue the interest on Dec. 21, 2023. Present value of 1 at 8%:For one period 0.93For two periods 0.86 For three periods 0.79 1. What is the impairment loss for 2023?2. What is the interest income for 2024?3. What is the carrying amount of the loan receivable on December 31, 2024?
7
On December 31, 2020, Ed Abbey Co. performed environmental consulting services for Hayduke Co. Hayduke was short of cash, and Abbey Co. agreed to accept a $200,000 zero-interest-bearing note due December 31, 2022, as payment in full. Hayduke is somewhat of a credit risk and typically borrows funds at a rate of 10%. Abbey is much more creditworthy and has various lines of credit at 6%. For step 1, why is it worked out 1/1.1 and answer divided by 1.1 to get 0.826446? Can you explain it to me step by step please. It is PV at 10% for end of year 2. I am having trouble understanding the process. Can you please explain it to me?