3-1.
a. Accounts Receivable
b. Receivables from Employees (part of non-trade receivables) – current assets
c. Advances to Suppliers – Current assets or deduction from Accounts Payable to the same supplier
d. Accounts Receivable
e. Customers’ Accounts with Credit Balances – Current Liabilities f. Cost of merchandise must be included in inventories
g. Accounts Receivable
h. Subscriptions Receivable – current asset if collectible within 12 months; otherwise, non-current asset or deduction from Shareholders’ Equity
i. Other Non-Trade Receivables – Current asset or non-current asset depending on terms of payment
j. Advances to Suppliers – Current Assets
k. Suppliers’ Accounts with Debit Balances or Advances to Suppliers – Current assets l. Accounts Receivable
m. Claims for Income Tax Refund – Current Assets
n. Accounts Receivable, amount of loan presented separately as part of liabilities o. Accounts Receivable
p. Not recognized anymore (for write off) 3-2. (Ginoo Company)
Gross Method
Dec. 9 Accounts Receivable-First Lady 68,400
Sales 68,400
80,000 x 90% x 95%
10 Accounts Receivable-Men’s World 50,000
Sales 50,000
19 Cash 67,032
Sales Discounts 1,368
Accounts Receivable-First Lady 68,400
26 Accounts Receivable-Teens’ Kingdom 40,000
Sales 40,000
31 Sales Discounts 800
Allowance for Sales Discounts 800
2014
Jan. 5 Cash 39,200
Allowance for Sales Discounts 800
Accounts Receivable-Teens’ Kingdom 40,000
9 Cash 50,000
Accounts Receivable-Men’s World 50,000
Net Method
10 Accounts Receivable-Men’s World 49,000
Sales 49,000
19 Cash 67,032
Accounts Receivable-First Lady 67,032
Dec. 26 Accounts Receivable-Teens’ Kingdom 39,200
Sales 39,200
31 Accounts Receivable-Men’s World 1,000
Sales Discount Forfeited 1,000
2014
Jan. 5 Cash 39,200
Accounts Receivable – Teens’ Kingdom 39,200
9 Cash 50,000
Accounts Receivable-Men’s World 50,000
Allowance Method
Dec. 9 Accounts Receivable-First Lady 68,400
Allowance for Sales Discount 1,368
Sales 67,032
10 Accounts Receivable-Men’s World 50,000
Allowance for Sales Discount 1,000
Sales 49,000
Dec. 19 Cash 67,032
Allowance for Sales Discount 1,368
Accounts Receivable-First Lady 68,400
26 Accounts Receivable-Teens’ Kingdom 40,000
Allowance for Sales Discount 800
Sales 39,200
31 Allowance for Sales Discount 1,000
Sales Discount Forfeited 1,000
2014
Jan. 5 Cash 39,200
Allowance for Sales Discount 800
Accounts Receivable-Teens’ Kingdom 40,000
9 Cash 50,000
Accounts Receivable-Men’s World 50,000
3-3. (Colleco Supermarket) June
1-30 Accounts Receivable – Citibank Cash 2,450,0001,764,000 Accounts Receivable – Metrobank 1,470,000
Credit Card Service Charges 116,000
Sales 5,800,000
Accounts Receivable - Citibank 2,156,000 Accounts Receivable - Metrobank 1,078,000 3-4. (Colayco Company)
(1)
July 14 Allowance for Doubtful Accounts 10,000
Accounts Receivable-Moret Co. 10,000
31 Notes Receivable 12,000 Sales 12,000 Aug. 15 Cash 20,000 Notes Receivable 15,000 Sales 35,000 Nov. 1 Cash 19,200
Credit Card Service Charge 800
Sales 20,000
4% x 20,000 = 800
Nov. 4 Accounts Receivable-P. Noval 12,300
Notes Receivable 12,000
Interest Revenue 300
12,000 x .10 x 90/360 = 300
5 Accounts Receivable-Credit Card 9,000
Sales 9,000
Nov. 9 Cash 8,550
Credit Card Service Charge 450
Accounts Receivable-Credit Card 9,000
5% x 9,000 = 450
Nov. 15 Accounts Receivable-Moret Co. 10,000
Allowance for Bad Debts 10,000
15 Cash 10,000
Accounts Receivable-Moret Co. 10,000
Dec. 13 Cash 15,600
Notes Receivable 15,000
Interest Revenue 600
15,000 x 12% x 120/360 = 600 3-5. (Format Company)
a. Carrying value of the note on January 1, 2013
P6,000,000 x 0.6575 P3,945,000
Prevailing interest rate 15%
b. Carrying value, January 1, 2013 P3,945,000
Add amortization of discount during 2013 591,750
Carrying value, December 31, 2013 P4,536,750
(or simply P3,945,000 x 1.15 = P4,536,750) 3-6. (Formatted Company)
a. Carrying value of the note on January 1, 2013 (P2 M x 2.2832) P4,566,400
Interest rate 15%
Interest revenue for 2013 P 684,960
Carrying value, December 31, 2013
4,566,400 + 684,960 – 2,000,000 P3,251,360
Interest rate 15%
Interest revenue for 2014 P 487,704
b. Carrying value, January 1, 2013 P4,566,400
Add amortization of discount during 2012 684,960
Less first payment of principal (2,000,000)
Carrying value, December 31, 2012 P3,251,360
3-7. (HRV Company) (a) September 30, 2014 (1,000,000)+(3,000,000 x 12%) P1,360,000 September 30, 2015 (1,000,000)+(2,000,000 x 12%) P1,240,000 September 30, 2016 (1,000,000)+(1,000,000 x 12%) P1,120,000 (b) January 1 – September 30, 2014 (260,000 x 9/12) P 270,000 October 1 – December 31, 2014 (240,000 x 3/12) 60,000 Total interest revenue for 2014 P 330,000 (c) As of December 31, 2013 Current Non-current
Notes receivable P1,000,000 P2,000,000 Interest receivable (360,000 x 3/12) 90,000
3- 8. (Pinky Pop Company)
The note is interest-bearing, but the rate of interest of the note (5%) is unreasonably lower than the prevailing rate (10%) for similar obligation. The present value of the note is determined as follows: 2.5 M + (5% x 7.5 M) 2,875,000 x 0.9091 P2,613,663 2.5 M + (5% x 5.0 M) = 2,750,000 x 0.8264 2,272,600 2.5 M + (5% x 2.5 M) = 2,625,000 x 0.7513 1,972,163 Total P6,858,426 or 2.5 M x 2.4869 P6,217,250 (5% x 7.5 M) x 0.9091 340,913 (5% x 5.0 M) x 0.8264 206,600 (5% x 2.5 M) x 0.7513 93,913 Total P6,858,676
(a) Amortization Table
Date Payment ofPrincipal InterestPaid RevenueInterest Amortizationof Discount CarryingValue
01/01/13 6,858,426
12/31/13 2,500,000 375,000 685,843 310,843 4,669,269 12/31/14 2,500,000 250,000 466,927 216,927 2,386,196 12/31/15 2,500,000 125,000 238,804* 113,804* ---*difference is due to rounding off
(b) Journal entries 2013
Jan. 1 Notes Receivable 7,500,000
Discount on Notes Receivable 641,574
Gain on Sale of Land 858,426
Land 6,000,000
7,500,000 – 6,858,426 = 641,574 Discount 6,858,426 – 6,000,000 = 858,426 Gain
Dec. 31 Cash 2,875,000
Discount on Notes Receivable 310,843
Interest Revenue 685,843
Notes Receivable 2,500,000
2014
Dec. 31 Cash 2,750,000
Discount on Notes Receivable 216,927
Interest Revenue 466,927
Notes Receivable 2,500,000
2015
Dec. 31 Cash 2,625,000
Discount on Notes Receivable 113,804
Interest Revenue 238,804
Notes Receivable 2,500,000
3-9. Pinky Pip Company
The note is interest-bearing, but the rate of interest of the note (14%) is unreasonably higher than the prevailing rate (10%) for similar obligation. The present value of the note is determined as follows: 2.5 M + (14% x 7.5 M) = 3,550,000 x 0.9091 P3,227,305 2.5 M + (14% x 5.0 M) = 3,200,000 x 0.8264 2,644,480 2.5 M + (14% x 2.5 M) = 2,850,000 x 0.7513 2,141,205 Total P8,012,990 or 2.5 M x 2.48685 P6,217,125 (14% x 7.5 M) x 0.9091 954,555 (14% x 5.0 M) x 0.8264 578,480 (14% x 2.5 M) x 0.7513 262,955 Total P8,013,115*
a. Amortization Table
Date Payment ofPrincipal InterestPaid RevenueInterest Amortizationof Premium CarryingValue
01/01/13 8,012,990
12/31/13 2,500,000 1,050,000 801,299 248,701 5,264,289 12/31/14 2,500,000 700,000 526,429 173,571 2,590,718 12/31/15 2,500,000 350,000 259,282* 90,718* ---*Difference is due to rounding off
b. Journal entries 2013
Jan. 1 Notes Receivable 7,500,000
Premium on Notes Receivable 512,990
Gain on Sale of Land 2,012,990
Land 6,000,000
8,012,990 – 7,500,000 = 512,990 Premium 8,247,955 – 6,000,000 = 2,247,955 Gain
Dec. 31 Cash 3,550,000
Premium on Notes Receivable 248,701
Interest Revenue 801,299
Notes Receivable 2,500,000
2014
Dec. 31 Cash 3,200,000
Premium on Notes Receivable 173,571
Interest Revenue 526,429
Notes Receivable 2,500,000
2015
Dec. 31 Cash 2,850,000
Premium on Notes Receivable 90,718
Interest Revenue 259,282
Notes Receivable 2,500,000
3-10. (Word Company)
Uncollectible Accounts Expense P52,000 Allowance for Uncollectible Accounts 50,000 Required balance in allowance account:
(2% x 500,000) + (10% x 200,000) + (20% x 100,000) P50,000 Reported balance in allowance before adjustments (debit) 2,000 Required adjustment charged to uncollectible accounts expense P52,000
3-11. (Edit Company)
Allowance for Uncollectible Accounts, beg P 6,000 Recovery of accounts previously written off 3,000
Uncollectible accounts expense for 2013 48,000
Allowance for Uncollectible Accounts, end (12,000)
Accounts written off during 2013 P45,000
3-12. (Toyota Products, Inc.)
a. Accounts receivable 4,800,000
Sales 4,800,000
b. Cash 3,920,000
Sales discounts 80,000
Accounts receivable 4,000,000
c. Allowance for uncollectible accounts 20,000
Accounts receivable 20,000
d. Accounts receivable 5,000
Allowance for uncollectible accounts 5,000
Cash 5,000 Accounts receivable 5,000 e. Notes receivable 25,000 Accounts receivable 25,000 f. Cash 400,000 Notes payable-bank 400,000 Cash 150,000 Accounts receivable 150,000 Notes payable-bank 150,000 Cash 150,000
g. Uncollectible Accounts Expense 65,000
Allowance for Uncollectible Accounts 65,000
9,000 – 20,000 + 5,000 = 6,000 debit 59,000 + 6,000 = 65,000 h. Interest receivable 250 Interest revenue 250 25,000 x 12% x 30/360 Accounts receivable (450,000+4,800,000–4,000,000–20,000–25,000–150,000) P1,055,000 Less Allowance for uncollectible accounts 59,000 Amortized cost of accounts receivable P 996,000
3-13. (Rav, Inc.)
Accounts Receivable, December 31, 2012 P 337,000
Sales on account during 2013 1,500,000
Cash received from customers (1,600,000)
Cash discounts allowed: (882,000 ÷ 98%) x 2% P18,000
(495,000 ÷ 99%) x 1% 5,000 (23,000) Recovery of accounts written off 3,000
Accounts written off as worthless (11,000)
Credit memoranda for sales returns (6,000)
Accounts Receivable, December 31, 2013 P 200,000
Allowance for Uncollectible Accounts, December 31, 2012 P 12,000 Recovery of accounts written off 3,000
Accounts written off as worthless (11,000)
Impairment loss on receivables 15,000
Allowance for Uncollectible Accounts, December 31, 2013 P 19,000 The computation may also be conveniently done through T-accounts, as follows:
Accounts Receivable
Balance, beg 337,000 Collections 1,600,000
Sales on account 1,500,000 Cash discounts 23,000
Recovery 3,000 Write off 11,000
Sales returns 6,000
Total 1,840,000 Total 1,640,000
Balance, end 200,000
Allowance for Uncollectible Accounts
Write off 11,000 Balance, beg 12,000
Recovery 3,000
Impairment 15,000
Total 11,000 Total 30,000
Balance, end 19,000
3-14. (Revo Company)
Allowance for Uncollectible Accounts, January 1, 2013 P 34,000
Accounts written off (47,000)
Recovery of accounts previously written off 7,000
Additional accounts written off (6,000)
Allowance for Uncollectible Accounts, December 31, 2012
before adjustments (debit balance) (P12,000) Required balance in Allowance account based on aging:
(5% x 240,000) + (25% x 20,000) + (50% x 30,000) + (90% x 24,000) 53,600 Required adjustment/Uncollectible Accounts Expense for 2013 P65,600
Accounts Receivable, December 31, 2013 P654,000
Less Allowance for Uncollectible Accounts 53,600
3-15. (Adventure Company)
a. Required/Adjusted balance of Allowance for Uncollectible Accounts:
20% x 600,000 past due accounts P 120,000 5% x 1,400,000 current accounts 70,000
Total P 190,000
Accounts Receivable, December 31 P 2,000,000
Past due accounts 600,000
Current accounts/Not yet past due P 1,400,000 Accounts Receivable, January 1 P 1,200,000
Sales during 2012 10,000,000
Cash collected from customers (8,720,000) Recovery of accounts previously written off 20,000 Note received in settlement of an account ( 400,000) Accounts written off as worthless ( 100,000) Accounts Receivable, December 31 P 2,000,000 b. Adjusted Allowance for Uncollectible Accounts, end P190,000
Accounts written off during the year as worthless 100,000 Recovery of accounts previously written off (20,000) Allowance for Uncollectible Accounts, beg (60,000) Uncollectible Accounts Expense for year 2013 P210,000
c. Accounts Receivable P2,000,000
Less Allowance for Uncollectible Accounts 190,000 Amortized cost of accounts receivable, December 31, 2013 P1,810,000
3-16. (Maynilad Company) Alternative 1
Carrying value (10 M + 1.2 M) 11,200,000
Present value of future cash inflows:
Principal due on 12/31/15 (9M x 0.7972) P7,174,800 Interest for 2 years
9M x 8% = 720,000; 720,000 x 1.6901 1,216,872 8,391,672
Impairment loss P2,808,328
Entry: Restructured Notes Receivable 8,391,672 Impairment Loss – Receivables 2,808,328
Notes Receivable 10,000,000
Interest Receivable 1,200,000
Alternative 2
Carrying value (10 M + 1.2 M) 11,200,000
Present value of future cash inflows:
2M + (8% x 10M) = 2,800,000 x 0.8929 2,500,120 2M + (8% x 8M) = 2,640,000 x 0.7972 2,104,608 2M + (8% x 6M) = 2,480,000 x 0.7118 1,765,264
2M + (8% x 4M) = 2,320,000 x 0.6355 1,474,360
2M + (8% x 2M) = 2,160,000 x 0.5674 1,225,584 9,069,936
Impairment loss 2,130,064
Entry: Restructured Notes Receivable 9,069,936 Impairment Loss – Receivables 2,130,064
Notes Receivable 10,000,000
Interest Receivable 1,200,000
Alternative 3
Carrying value 10,000,000
Present value of future cash inflows: Principal due on 12/31/15
10M x 0.7972 7,972,000
Interest due on 12/31/14 and 12/31/15
10M x 9% = 900,000; 900,000 x 1.6901 1,521,090 9,493,090
Impairment loss 506,910
Entry: Restructured Notes Receivable 9,493,090 Impairment Loss – Receivables 506,910
Notes Receivable 10,000,000
Cash 1,200,000
Interest Receivable 1,200,000
Alternative 4
Carrying value 11,200,000
Present value of future cash inflows: Principal due on 12/31/13
11.2M x 0.797193876 8,928,572 Interest due on 12/31/13 and 12/31/14
11.2M x 12% = 1,344,000;
1,344,000 x 1.6900510 2,271,428 11,200,000
Impairment loss
-0-No entry is required for the restructuring. 3-17. (Kate Company)
(a) Cash 750,000
Notes Payable – National Bank 750,000
(b) Current assets:
Trade and other receivables (including P900,000 of accounts
pledged as collateral for a loan with National Bank) P2,000,000 Current liabilities:
Notes Payable – National Bank P 750,000 Interest Payable 7,500 3-18. (Lexus Company)
Amount of the loan P650,000
Less service charge (2% x 800,000) 16,000
Sept. 1 Accounts Receivable Assigned 800,000
Accounts Receivable 800,000
Cash 634,000
Finance Charges 16,000
Notes Payable – Pacific Bank 650,000
Sept 1-30 Cash 300,000
Accounts Receivable Assigned 300,000
Sept. 30 Notes Payable – Pacific Bank 300,000
Interest Expense (650,000 x 12% x 1/12) 6,500
Cash 306,500
Oct. 1-31 Allowance for Uncollectible Accounts 10,000
Accounts Receivable Assigned 10,000
Cash 400,000
Accounts Receivable Assigned 400,000
Oct. 31 Notes Payable – Pacific Bank 350,000 Interest Expense (350,000 x 12% x 1/12) 3,500
Cash 353,500
31 Accounts Receivable 100,000
Accounts Receivable Assigned 100,000 3.19. Accord Company)
July 1 Accounts Receivable Assigned 4,000,000
Accounts Receivable 4,000,000
1 Cash 3,040,000
Finance Charges 160,000
Notes Payable – Bank 3,200,000
5% x 3,200,000 = 160,000
21 Sales Returns and Allowances 150,000
Accounts Receivable Assigned 150,000
31 Cash 2,450,000
Sales Discounts 50,000
Accounts Receivable Assigned 2,500,000
2% x 2,500,000 = 50,000
Aug. 1 Notes Payable – Bank 2,500,000
Interest Expense (3.2M x 0.12 x 1/12) 32,000
Cash 2,532,000
15 Allowance for Uncollectible Accounts 50,000
Accounts Receivable Assigned 50,000
31 Cash 1,000,000
Sept. 1 Notes Payable – Bank 700,000 Interest Expense (700,000 x 0.12 x 1/12) 7,000
Cash 707,000
1 Accounts Receivable 300,000
Accounts Receivable Assigned 300,000
3–20. (Fortune Company)
Oct. 1 Accounts Receivable Assigned 2,000,000
Accounts Receivable 2,000,000 1 Cash 1,410,000 Finance Charges 90,000 Notes Payable 1,500,000 31 Interest Expense (1.5M x 0.12 x 1/12) 15,000 Notes Payable 985,000
Accounts Receivable Assigned 1,000,000
Nov. 30 Notes Payable 515,000
Interest Expense (515,000 x 0.12 x 1/12) 5,150
Cash 279,850
Accounts Receivable Assigned 800,000 3-21. (Highlander Company)
a.
Sept. 1 Cash 684,000
Receivable from Factor 36,000
Loss from Factoring 80,000
Accounts Receivable 800,000 800,000 x 10% =80,000 Loss; 720,000 x 5% = 36,000 withheld Nov. 1 Cash 582,000 Finance Charges 18,000 Notes Payable-Bank 600,000 3% x 600,000 = 18,000 b.
Dec. 31 Uncollectible Accounts Expense 10,400
Allowance for Uncollectible Accounts 10,400 (190,000 + 1,000,000) x 2% = 23,800 – 13,400
3-22. (Hiku Company)
(a) Selling price of Accounts Receivable 90% x P1,200,000= P1,080,000 Factor’s holdback (6% x 1,080,000) (64,800)
Cash received from factoring P1,015,200
(b) Accounts receivable assigned balance (500,000 – 350,000) P 150,000 Balance of notes payable to the bank
400,000 – (350,000 – 4,000) (54,000)
(c) Face value of note discounted P 50,000 Interest for the full term April 30 – August 28
(50,000 x 9% x 120/360) 1,500
Maturity value P 51,500
Discount (51,500 x 10% x 88/360) (1,259)
Proceeds P 50,241
3-23. ( Edsamail Company)
(a) Maturity value = 500,000 + (500,000 x .08) = 540,000 Proceeds = 540,000 – (540,000 x 0.10 x 5/12) = 517,500
(b) Interest Receivable 23,333
Interest Revenue 23,333
500,000 x 8% x 7/12
Cash 517,500
Loss on Sale of Notes Receivable 5,833
Notes Receivable 500,000
Interest Receivable 23,333
3-24. a. Proceeds 90,000 – (90,000 x 0.12 x 20/365) = P89,408
Cash 89,408
Liability on Discounted Notes 89,408 b. Maturity value 75,000 + (75,000 x 0.09 x 90/365) = P76,664
Proceeds 76,664 – (76,664 x 0.12 x 50/365) = P75,404
Cash 75,404
Liability on Discounted Notes 75,404
c. Maturity value 60,000 + (60,000 x 0.14 x 120/365) = P62,762 Proceeds 62,762 – (62,762 x 0.12 x 45/365) = P61,833
Cash 61,833
Liability on Discounted Notes 61,833
3-25. (Crosswind Corporation)
2013
Feb. 1 Notes Receivable 60,000
Accounts Receivable 60,000
Apr. 1 Cash 59,985
Liability on Discounted Notes 59,985
60,000 + (60,000 x .10 x 9/12) = 64,500 64,500 – (64,500 x .12 x 7/12) = 59,985
Nov. 2 Liability on Discounted Notes 59,985 Interest Expense (64,500 x 0.12 x 7/12) 4,515 Notes Receivable 60,000 Interest revenue (60,000 x 0.10 x 9/12) 4,500 2 Accounts Receivable (64,500 + 1,500) 66,000 Cash 66,000 3-26. (Explorer Company) (a)
Accounts receivable factored P2,000,000
Purchase price 85%
Purchase price of accounts receivable factored P 1,700,000 Less amount withheld (5% x 1,700,000) 85,000 Net cash received from the factored accounts P 1,615,000 (b)
Cash 1,615,000
Receivable from Factor 85,000
Loss on Factoring 300,000
Accounts Receivable 2,000,000
Sales Returns 30,000
Receivable from Factor 30,000
Cash 55,000
Receivable from Factor 30,000
3.27. (Nature Company) (a) 1/1/12 Interest Revenue 2,800 Interest Receivable 2,800 (1) Accounts Receivable 2,800,000 Sales 2,800,000 (2) Cash 2,200,000 Sales Discounts 18,000 Accounts Receivable (2,218,000 – 180,000)* 2,038,000
Accounts Receivable Assigned * 180,000
(3) Notes Receivable 250,000 Accounts Receivable 250,000 (4) Cash 216,000 Notes Receivable 200,000 Interest Revenue 16,000 (5) Cash 41,400
Liability on Discounted Notes 41,400
Interest expense 4,600
Notes Receivable 40,000
Interest revenue 6,000
(6) Accounts Receivable Assigned 300,000
Accounts Receivable 300,000 Cash 222,000 Finance Charges 18,000 Notes Payable 240,000 (7) Accounts Receivable 15,900 Notes Receivable 15,000 Interest Revenue 900
(8) Allowance for Uncollectible Accounts 12,000
Accounts Receivable 12,000
(9) Notes Payable 180,000
Interest Expense 3,000
Cash 183,000
(10) Uncollectible Accounts Expense 20,000
Allowance for Uncollectible Accounts 20,000 20,000 – (12,000 – 12,000 )
(11) Interest Receivable 3,200
Interest Revenue 3,200
*See item (9)
(b) Trade and Other Receivables P1,014,100
Trade and Other Receivables include the following:
Notes Receivable P 95,000
Accounts Receivable – Unassigned 815,900 Accounts Receivable - Assigned 120,000 Interest Receivable 3,200 Allowance for Uncollectible Accounts (20,000)
MULTIPLE CHOICE QUESTIONS Theory MC1 A MC11 C MC2 B MC12 C MC3 A MC13 A MC4 A MC14 C MC5 C MC15 A MC6 A MC16 D MC7 D MC17 A MC8 A MC18 C MC9 A MC10 C Problems MC19 B 450,000 x 1.4 = 630,000; 630,000 – 585,000 = 45,000 MC20 D 105,000 x .90 = 94,500 (Invoice price/Gross) 94,500 x .98 = 92,610 (net price)
MC21 C 200,000 x .90 x .95 = 171,000 (Invoice price/Gross); 171,000 x .97 = 165,870 (Net) MC22 B 1,300,000 + 5,400,000 + 25,000 – 4,750,000 – 125,000 = 1,850,000 MC23 A 360,000 ÷ 80% = 450,000; 450,000 + 80,000 – 430,000 = 100,000 MC24 D 75,000 + 45,000 = 120,000 MC25 D 3% x 1,000,000 = 30,000 MC26 C 30,000 + 8,000 = 38,000 MC27 D 270,000 – 250,000 = 20,000; 20,000 + 23,000 – 28,000 – 5,000 = 10,000 MC28 B 17,500 – 30,500 + 8,050 + 200,000 = 15,050 MC29 B 480,000 + 2,400,000 – 2,560,000 – 17,600 – 36,800* + 4,800 = 270,400 *1,411,200 ÷ .98 = 1,440,000 x 2% = 28,800 792,000 ÷ .99 = 800,000 x 1% = 8,000; 28,800 + 8,000 = 36,800 MC30 A 19,200 + 4,800 – 17,600 = 6,400; 5% x 270,400 = 13,520; 13,520 – 6,400 = 7,120 MC31 A (5% x 600,000) + (10% x 40,000) + 14,000 = 48,000 MC32 B 20,000 + 7,500 – 12,500 – 3,700 = 11,300 MC33 D 50,000 + (50,000 x 10%) = 55,000; 55,000 – (55,000 x .12 x 6/12) = 51,700 MC34 C 400,000 x .75 = 300,000; 300,000 x 10% = 30,000 MC35 C 300,000 + 30,000 = 330,000 MC36 C 1,940,000 x 13.4% x 1/12= 21,663
MC37 B 2,000,000 x 12% x 1/12 = 20,000 (Note: The difference between interest income of P21,663 and interest receivable of 20,000 is debited to Discount on Notes Receivable). MC38 A 902,500 – (11% x 2,800,000) = 594,500
MC39 C (308,000 x 6/12) + (242,605 x 6/12) = 275,303 (See complete amortization table below)* MC40 B 500,000 + (500,000 x 8%) = 540,000; 540,000 – (540,000 x 10% x 8/12) = 504,000 MC41 B 1,250,000 - (2% x 1,250,000)} = 1,225,000; 1,225,000 + 695,000 = 1,920,000 MC42 D (500,000 + 2,200,000) x 3% = 81,000; 81,000 – 32,000 = 49,000
MC44 A 5,500,000 – [(4,000,000 X .83) + (320,000 X 1.74)] = 1,623,200 MC45 D (4,000,000 X .83) + (320,000 X 1.74) = 3,876,800
*
Date Annual payment Interest income Reduction in principal Balance
July 1, 2012 2,800,000
July 1, 2013 902,500 11% x 2,800,000=308,000 902,500-308,000=594,500 2,205,500 July 1, 2014 902,500 11% x 2,205,500=242,605 902,500-242,605=659,895 1,545,605 July 1, 2015 902,500 11% x 1,545,605=170,017 902,500-170,017=732,483 813,122 July 1, 2016 902,500 902,500-813,122=89,378 813,122
