On January 1, 2016, Harrieth Bank, Inc. approved the loan to Marideth Company for P 5,000,000. The termsof the loan were payment in full on December 31, 2020 plus annual interest payments at 10% every end ofthe calendar period starting year 2016 until December31, 2020.Due to COVID-19 pandemic, Marideth Company is experiencing decline in revenues and is likely to default onits loan payment with Harrieth Bank, Inc. This made Marideth Company to request for a loan restructuring onDecember 31, 2020. On this date, Harrieth Bank, Inc. accrued the interest for the year 2020. Both partiesagreed to condone the interest receivable and reduce the principal by P 1,000,000. In addition, the maturitydate is extended to December 31, 2023 with interest during the extended term at 7% payable annually untilDecember 31, 2023.Round off all present value factors to four decimal places.No.QUESTIONSYour AnswerWhat is the present value of the future cash flows as of restructuring1.date?[ Select ]2. How much is the impairment loss to be recognized in 2020?[ Select ]

Answered: Image /qna-images/answer/6d7a732d-2164-4062-882a-e49b2a1de1ca.jpg

Answered: On January 1, 2016, Harrieth Bank, Inc.…

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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Swathmore Clothing Corporation grants its customers 30 days' credit. The company uses the allowance method for its uncollectible accounts receivable. During the year, a monthly bad debt accrual is made by multiplying 2% times the amount of credit sales for the month. At the fiscal year-end of December 31, an aging of accounts receivable schedule is prepared and the allowance for uncollectible accounts is adjusted accordingly. At the end of 2023, accounts receivable were $610,000 and the allowance account had a credit balance of $74,000. Accounts receivable activity for 2024 was as follows: Beginning balance Credit sales Collections Write-offs Ending balance The company's controller prepared the following aging summary of year-end accounts receivable: Summary Age Group $ 610,000 2,800,000 (2,663,000) (57,000) $ 690,000 0-60 days 61-90 days 91-120 days over 120 days Total Amount $ 460,000 78,000 67,000 85,000 $ 690,000 Percent Uncollectible 44 15 26 41 Required: 1. Prepare a summary…
On July 1, 2017, KYU Co. discounted a 90-day, P850,000, 12% note, received from a customer on June 1, 2017, with a bank at 16% on with recourse basis. The discounting is treated as a conditional sale. The bank uses 365 days per year in computing for discounts. On August 30, 2017 (maturity date), the maker of the note defaulted and the bank charged KYU Co. the maturity value of the note plus a P3,000 protest fee. How much is transferred to accounts receivable due to the dishonor?
On January 1, 2011, ACB Inc. gave a loan to XYZ Enterprises amounting to P100,000 and received a two year, six percent P100,000 note. The note calls for annual interest to be paid each December 31. The company collected the 2015 interest on schedule. At December 31, 2016, however, based on XYZ's recent financial problems, ABC expects that the 2012 interest will not be collected and that only P60,000 of the principle due December 31, 2012 will be collected. The P60,000 principal amount is expected to be collected in two equal installments on December 31, 2014 and December 31, 2016. ABC believes that 6% is the market's assessment of the time value of money. 1. What entries should be made in the records of ABC company on December 31, 2012? 2. Assume that ABC Inc. collects the expected payments from XYZ. What entries should be made on December 31, 2013? December 31, 2014 December 31, 2015 and December 31, 2016?
35.On December 31, 2021, the Trust Finance Company had a P5,000,000 note receivable from Leila Company. The note bears 10% interest. The books reported accrued interest of P500,000 on this date. Because of financial distress being suffered by Leila Company, Trust Finance agreed to the restructuring and modification of the terms of its loan to Burgundy as follows: ·reduction of principal to P3,500,000; ·reduction of interest to 7% payable annually beginning Dec. 31, 2022; ·accrued interest on Dec. 31, 2021 is condoned; and ·principal payment was reset to Dec. 31, 2023. The prevailing market rate of interest for similar obligations on the date of restructuring decreased to 9%. Use present value factors rounded to two decimal places. How much impairment loss should Trust Finance Company record on December 31, 2021 as a result of the restructuring?
On December 31, 2012, Greendale Corporation is experiencing extreme financial pressure and is in default in meeting interest payments on its long-term note of P6,000,000 due on December 31, 2013. The interest rate is 10% payable every December 31. In an agreement with the creditor, Greendale Corporation obtained certain changes in the terms of the note as listed in the image below. What is Greendale Corporation’s gain on debt restructuring? (Round off present value factors to four decimal places) a. P 1,979,180 b. P 1,600,000 c. P 1,221,020 d. P 0
Grouper Inc. is a reliable, long-term customer of Monty Ltd. Due to unexpected costs of rapid expansion, Grouper was unable to pay its account balance when it became due on January 1, 2023. Monty agreed to accept a $225,000 non- interest bearing note that would be payable on December 31, 2026. This type of financing would typically have an interest rate of 12%. 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. (a) Use 1. PV.1 Tables, 2. a financial calculator, or 3. Excel functions to arrive at the amount to record the note receivable. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and round final answer to 0 decimal places, e.g. 8,971.) Your answer has been saved. See score details after the due date. Note receivable $ (b) eTextbook and Media (c) List of Accounts Your answer has been saved. See score details after the due date. Account Titles and Explanation Notes Receivable Prepare…
On April 1, 2021, the Electronic Superstore borrows $21 million of which $7 million is due in 2022. Show how the company would report the $21 million debt on its December 31, 2021 balance sheet. (Enter your answers in dollars not in millions. For example, $7,000,000 rather than $7 million.) Electronic Superstore Partial Balance sheet December 31st 2021 Current liabilities: Long-term liabilities: Total liabilities
Grouper Inc. is a reliable, long-term customer of Monty Ltd. Due to unexpected costs of rapid expansion, Grouper was unable to pay its account balance when it became due on January 1, 2023. Monty agreed to accept a $225,000 non- interest bearing note that would be payable on December 31, 2026. This type of financing would typically have an interest rate of 12%. 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. (a) Use 1. PV.1 Tables, 2. a financial calculator, or 3. Excel functions to arrive at the amount to record the note receivable. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and round final answer to 0 decimal places, e.g. 8,971.) Your answer has been saved. See score details after the due date. Note receivable $ (b) eTextbook and Media (c) List of Accounts Your answer has been saved. See score details after the due date. Account Titles and Explanation Notes Receivable Prepare…
On December 31 , 2018 Nicholas Co. is in financial difficulty and cannot pay a note due that day . It is a $3,300,000 8% issued at par note, payable to Key Bank. Key Bank agrees to accept from Nicholas equipment that has a fair value of 1,450,000, originally costing $2,400,000, with accumulated depreciation of $1,250,000. Key Bank also extends the maturity date to December 31, 2021, reduces the face amount of the note to $1,250,000, and reduces the interest rate to 6%, with interest payable at the end of each year. a. Nicholas should recognize a gain or loss on the transfer of the equipment of: b. At the end of each of the next three years Nicholas records the $ 75,000 interest paid to Key Bank as a: c. In determining the carrying value of the note at December 31, 2018 Key Bank uses an effective interest rate equal to: d. Key Bank records a loss on restructuring of: e. In recording the loss on restructuring, Key bank:
On December 31, 2014, JKL Bank granted P6,000,000 loan to a borrower with a 10% stated rate payable SEMI-ANNUALLY and maturing in 4 years. The loan was discounted at an interest rate of 12%. Unfortunately, the financial condition of the borrower worsened because of lower revenue. On December 31, 2016, the bank determined that the borrower would pay back only P1,000,000 of the principal at maturity. However, it was considered likely that interest would continue to be paid on the P6,000,000 loan. (Round off PV factor to 4 decimal places) 1. Cash paid to the borrower on December 31, 2014 2. Carrying amount of the loan at December 31, 2016 3. Interest income for the year 2016 4. Impairment loss to be recognized on December 31, 2016 5. Carrying amount of the loan at December 31, 2017
Manji
On December 31, 2020, Monty Co. performed environmental consulting services for Hayduke Co. Hayduke was short of cash, and Monty Co. agreed to accept a $296,600 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 12%. Monty is much more creditworthy and has various lines of credit at 6%. Prepare the journal entry to record the transaction of December 31, 2020, for the Monty Co. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answers to O decimal places, e.g. 5,275. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Debit Date Account Titles and Explanation Dec. 31, 2020 eTextbook and Media List of Accounts Assuming Monty Co's fiscal year-end is December 31, prepare the journal entry for December 31, 2021. (Round…

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