Required: Using excel, explain step by step on how you perform each questions below. a) What is the total finance charge and the effective interest rate? (Until two decimal points) Prepare the lease receivable schedule. b) c) Prepare the journal entry of the lessor as follows: i. at the date of sale of the motor vehicle ii. iii. to recognize the receivable on hire-purchase to record upfront lease payment from customer to recognize interest income at effective interest rate iv.
Required: Using excel, explain step by step on how you perform each questions below. a) What is the total finance charge and the effective interest rate? (Until two decimal points) Prepare the lease receivable schedule. b) c) Prepare the journal entry of the lessor as follows: i. at the date of sale of the motor vehicle ii. iii. to recognize the receivable on hire-purchase to record upfront lease payment from customer to recognize interest income at effective interest rate iv.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
![CCB Bank Berhad is one of the largest financial holding company in the country. It commenced
operation on 1 April 2000 as a full-fledged commercial bank. CCB Bank provides a suite of
financial products and services that is catered to both retail and corporate customers. The target
business segments are categorised under key business units such as Corporate Banking,
Community Banking, Enterprise Banking, and Treasury.
On 1 January 2019, CCB Bank enters into hire-purchase contract with a customer for financing a
motor vehicle. The customer purchases the motor vehicle from a car manufacturer at a price of
RM200,000 paid in cash by the bank. The cost of the motor vehicle is RM120,000.
For this contract, CCB Bank quotes a flat interest rate of 2.5% per year based on the market
price of the motor vehicle. The arrangement with the customer requires an upfront payment of
RM44,000 followed by four annual instalments of RM44,000 at the end of each year. The
financial year end is 31 December. The Bank will release the charge on the title upon payment of
the last instalment.
Required:
Using excel, explain step by step on how you perform each questions below.
a)
What is the total finance charge and the effective interest rate? (Until two decimal points)
Prepare the lease receivable schedule.
b)
c)
Prepare the journal entry of the lessor as follows:
1.
at the date of sale of the motor vehicle
ii.
to recognize the receivable on hire-purchase
iii.
to record upfront lease payment from customer
iv.
to recognize interest income at effective interest rate](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa43ff9e7-1f28-4706-a372-72c39de156b8%2F9fecb3ca-d83c-4314-8ea2-bfed0658be6b%2Fu94e0l_processed.jpeg&w=3840&q=75)
Transcribed Image Text:CCB Bank Berhad is one of the largest financial holding company in the country. It commenced
operation on 1 April 2000 as a full-fledged commercial bank. CCB Bank provides a suite of
financial products and services that is catered to both retail and corporate customers. The target
business segments are categorised under key business units such as Corporate Banking,
Community Banking, Enterprise Banking, and Treasury.
On 1 January 2019, CCB Bank enters into hire-purchase contract with a customer for financing a
motor vehicle. The customer purchases the motor vehicle from a car manufacturer at a price of
RM200,000 paid in cash by the bank. The cost of the motor vehicle is RM120,000.
For this contract, CCB Bank quotes a flat interest rate of 2.5% per year based on the market
price of the motor vehicle. The arrangement with the customer requires an upfront payment of
RM44,000 followed by four annual instalments of RM44,000 at the end of each year. The
financial year end is 31 December. The Bank will release the charge on the title upon payment of
the last instalment.
Required:
Using excel, explain step by step on how you perform each questions below.
a)
What is the total finance charge and the effective interest rate? (Until two decimal points)
Prepare the lease receivable schedule.
b)
c)
Prepare the journal entry of the lessor as follows:
1.
at the date of sale of the motor vehicle
ii.
to recognize the receivable on hire-purchase
iii.
to record upfront lease payment from customer
iv.
to recognize interest income at effective interest rate
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