On January 1, 2021, Ott Company sold goods to FoxCompany. Fox Company signed a noninterest-bearing noteProblem 6-14 (AICPA Adapted)The prevailing rate of interest for this type of note at dateof issuance was 10%.The first payment was made on January 1, 2021.PV of an ordinary annuity of 1 at 10% for 6 periods 4.36PV of an ordinary annuity of1 at 10% for 7 periods 4.871. What amount should be recorded as sales revenue inJanuary 2021?а. 3,216,000b. 2,922,000c. 2,616,000d. 2,142,0002. What is the carrying amount of the note receivable onJanuary 1, 2021?a. 3,600,000b. 2,616,000с. 3,000,000d. 2,322,0003. What amount should be recognized as interest incomefor 2021?a. 300,000b. 232,200c. 261,600d. 360,0004. What is the carrying amount of the note receivable onDecember 31, 2021?a. 3,600,000b. 3,000,000c. 2,277,600d. 2,877,600AI QUAD CAMERAShot by jeremy2021/10/06 10:39192 Problem 6-6 (AICPA Adapted)On January 1, 2021, Remarkable Company had the followingaccount balances:Note receivable from sale of an idle buildingNote receivable from an officer7,500,0002,000,000The P7,500,000 note receivable is dated May 1, 2020, bearsinterest at 9% and represents the balance of the considerationreceived from the sale of an idle building to Solid Company.Principal payments of P2,500,000 plus interest are dueannually beginning May 1, 2021. Solid Company made thefirst principal and interest payment on May 1, 2021.The P2,000,000 note receivable is dated December 31, 2018,bears interest at 8% and is due on December 31, 2023.The note is due from the president of Remarkable Company.Interest is payable annually on December 31 and all interestpayments were made through December 31, 2021.On July 1, 2021, Remarkable Company sold a parcel of landto Boom Company for P4,000,000 under an installment salecontract.Boom Company made a P1,200,000 cash down payment onJuly 1, 2021, and signed a 4-year 10% note for the P2,800,000.balance.The equal annual payments of principal and interest on thenote totaled P880,000, payable on July 1 of each year from2021 through 2025.The fair value of the land at the date of sale was P4,000,000and the cost of the land was P3,000,000.Required:1. Determine the amount of notes receivable includingaccrued interest that should be classified as currentasset on December 31, 2021.2. Determine the amount of notes receivable that should beclassified as noncurrent asset on December 31, 2021.187AI QUAD CAMERAShot by jeremy2021/10/06 10:38

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On January 1, 2021, Ott Company sold goods to Fox Company. Fox Company signed a noninterest-bearing note requiring payment of P600,000 annually for seven years. The first payment was-made on January 1, 2021. Problem 6-14 (AICPA The prevailing rate of interest for this type of note at date of issuance was 10%. PV of an ordinary annuity of 1 at 10% for 6 periods 4.36 PV of an ordinary annuity of 1 at 10% for 7 periods 4.87 1. What amount should be recorded as sales revenue in January 2021? а. 3,216,000 b. 2,922,000 c. 2,616,000 d. 2,142,000 2. What is the carrying amount of the note receivable on January 1, 2021? a. 3,600,000 b. 2,616,000 c. 3,000,000 d. 2,322,000 3. What amount should be recognized as interest income for 2021? а. 300,000 b. 232,200 c. 261,600 d. 360,000 4. What is the carrying amount of the note receivable on December 31, 2021? a. 3,600,000 b. 3,000,000 c. 2,277,600 d. 2,877,600

On January 1, 2021, Ott Company sold goods to Fox Company. Fox Company signed a noninterest-bearing note requiring payment of P600,000 annually for seven years. The first payment was-made on January 1, 2021. Problem 6-14 (AICPA The prevailing rate of interest for this type of note at date of issuance was 10%. PV of an ordinary annuity of 1 at 10% for 6 periods 4.36 PV of an ordinary annuity of 1 at 10% for 7 periods 4.87 1. What amount should be recorded as sales revenue in January 2021? а. 3,216,000 b. 2,922,000 c. 2,616,000 d. 2,142,000 2. What is the carrying amount of the note receivable on January 1, 2021? a. 3,600,000 b. 2,616,000 c. 3,000,000 d. 2,322,000 3. What amount should be recognized as interest income for 2021? а. 300,000 b. 232,200 c. 261,600 d. 360,000 4. What is the carrying amount of the note receivable on December 31, 2021? a. 3,600,000 b. 3,000,000 c. 2,277,600 d. 2,877,600

FINANCIAL ACCOUNTING

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ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

On January 1, 2021, Ott Company sold goods to Fox
Company. Fox Company signed a noninterest-bearing note
Problem 6-14 (AICPA Adapted)
The prevailing rate of interest for this type of note at date
of issuance was 10%.
The first payment was made on January 1, 2021.
PV of an ordinary annuity of 1 at 10% for 6 periods 4.36
PV of an ordinary annuity of1 at 10% for 7 periods 4.87
1. What amount should be recorded as sales revenue in
January 2021?
а. 3,216,000
b. 2,922,000
c. 2,616,000
d. 2,142,000
2. What is the carrying amount of the note receivable on
January 1, 2021?
a. 3,600,000
b. 2,616,000
с. 3,000,000
d. 2,322,000
3. What amount should be recognized as interest income
for 2021?
a. 300,000
b. 232,200
c. 261,600
d. 360,000
4. What is the carrying amount of the note receivable on
December 31, 2021?
a. 3,600,000
b. 3,000,000
c. 2,277,600
d. 2,877,600
AI QUAD CAMERA
Shot by jeremy
2021/10/06 10:39
192

Problem 6-6 (AICPA Adapted)
On January 1, 2021, Remarkable Company had the following
account balances:
Note receivable from sale of an idle building
Note receivable from an officer
7,500,000
2,000,000
The P7,500,000 note receivable is dated May 1, 2020, bears
interest at 9% and represents the balance of the consideration
received from the sale of an idle building to Solid Company.
Principal payments of P2,500,000 plus interest are due
annually beginning May 1, 2021. Solid Company made the
first principal and interest payment on May 1, 2021.
The P2,000,000 note receivable is dated December 31, 2018,
bears interest at 8% and is due on December 31, 2023.
The note is due from the president of Remarkable Company.
Interest is payable annually on December 31 and all interest
payments were made through December 31, 2021.
On July 1, 2021, Remarkable Company sold a parcel of land
to Boom Company for P4,000,000 under an installment sale
contract.
Boom Company made a P1,200,000 cash down payment on
July 1, 2021, and signed a 4-year 10% note for the P2,800,000.
balance.
The equal annual payments of principal and interest on the
note totaled P880,000, payable on July 1 of each year from
2021 through 2025.
The fair value of the land at the date of sale was P4,000,000
and the cost of the land was P3,000,000.
Required:
1. Determine the amount of notes receivable including
accrued interest that should be classified as current
asset on December 31, 2021.
2. Determine the amount of notes receivable that should be
classified as noncurrent asset on December 31, 2021.
187
AI QUAD CAMERA
Shot by jeremy
2021/10/06 10:38

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