Title | Receivable Financing Problems Part 2 |
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Course | Accounting |
Institution | Lyceum of the Philippines University |
Pages | 2 |
File Size | 45.4 KB |
File Type | |
Total Downloads | 408 |
Total Views | 933 |
Download Receivable Financing Problems Part 2 PDF
1) Damas Company accepted from a customer a P 4,000,000, 90-day, 12% interest-bearing note dated August 31, 2017. On September 30, 2017, Rand discounted the note with recourse at the Golden State Bank at 15%. However, the proceeds were not received until October 1, 2017. The discounting with recourse is accounted for as a conditional sale with recognition of a contingent liability. 1. What is the amount received from the discounting of note receivable? a. 4,017,000 b. 4, 120,000 c. 4, 103,000 d. 3, 965,500
2. What is the loss on note receivable discounting? a. 40,000 b. 23,000 c. 17,000 d. 20,000
Solutions: 1) Principal Interest (4,000,000 x 12% x 90/360) Maturity value Less: Discount (4,120,000 x 15% x 60/360) Net proceeds
4,000,000 120,000 4,120,000 103,000 4,017,000
Answer: A 2) Principal Accrued interest receivable (4,000,000 x 12% x 30/360) Carrying amount of note receivable
4,000,000 40,000 4,040,000
Net proceeds
4,017,000
Carrying amount of note receivable
(4,040,000)
Loss on note receivable discounting
(23,000)
Answer: B 2) On November 1, 2017, Dane Company discounted with recourse at 10% a one-year, noninterest bearing, P2, 050,000 note receivable maturing on January 31, 2012. The discounting of the note receivable is accounted for as a conditional sale with recognition of a contingent liability. What amount of contingent liability for this note must Dane disclose in its financial statements for the year ended December 31, 2017? a. 2,050,000 b. 2,000,000 c. 2,033,333 d. 0 Answer: A...