Problem 10You are assigned to assess the collectibility of the receivables carried in the booksGoliath Company, your company's audit client. The working trial balance areprepared at December 31, 2021 showed the following balances:Notes Receivable6,000,000Accounts Receivable4,000,000In the course of your examination, you discovered the following:Notes Receivable from Company ANotes Receivable from Company B2,000,0003,000,000Notes Receivable from Company C1,000,000No interest has yet been recorded by Goliath during 2021 on any of the notes above.Company A is undergoing bankruptcy proceedings and has negotiated for arestructuring of its notes receivable. The note was for a four-year period andinterest of 10% is collectible annually. All interest accrued before 2021 has beencollected. The note matured on December 31, 2021. Collection of Interest was lastmade on December 31, 2020. The restructuring agreement with Company A calls forannual payment of P550,000 starting December 31, 2022. No further interest will becollected during the four-year term.The Notes Receivable from Company B is a three year non-interest bearing note,with face value of P3,000,000. The note was received in exchange for a piece of landsold by Goliath on May 1, 2021. The land was carried in the books at the date of saleat P2,600,000. The difference between the face amount of the note and the carryingvalue of the land was credited to gain on sale of land. The market interest rate for anote of this type is 10%.The Notes Receivable from Company C bears interest at 10%. The note was receivedfrom sale of goods in the normal course of business. The note is dated October 1,2021 and matures on March 31, 2022.REQUIRED:(a) Prepare any audit adjustments as a result of the foregoing.(b) Determine the carrying value of the notes that would appear under the currentassets section and non-current assets section of the statement of financial positionat December 31, 2021.(c) Determine the amount of impairment loss on receivables and interest revenuethat would appear in profit or loss for the year 2021.

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

You are assigned to assess the collectibility of the receivables carried in the books Goliath Company, your company's audit client. The working trial balance are prepared at December 31, 2021 showed the following balances: Notes Receivable Accounts Receivable 6,000,000 4,000,000 In the course of your examination, you discovered the following: Notes Receivable from Company A Notes Receivable from Company B Notes Receivable from Company C 2,000,000 3,000,000 1,000,000

You are assigned to assess the collectibility of the receivables carried in the books Goliath Company, your company's audit client. The working trial balance are prepared at December 31, 2021 showed the following balances: Notes Receivable Accounts Receivable 6,000,000 4,000,000 In the course of your examination, you discovered the following: Notes Receivable from Company A Notes Receivable from Company B Notes Receivable from Company C 2,000,000 3,000,000 1,000,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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