On January 1, 2020, Allure Company sold an equipment with a carrying amount ofP800,000, receiving a noninterest bearing note due in three years with a faceamount of P1,000,000. There is to established market value for the equipment.The interest rate on similar obligations is 12%, The present value of 1 at 12% forthree periods is .712.What amount should be reported as interest income for 2020/A.288,000B.120,000C.96,000D.85,440

Solution: Present value of note = 712,000 Interest rate = 12% Interest income = 712,000 x 12%…

amount of P1,000,000. There is to established market value The interest rate on similar obligations is 12%, The present va three periods is .712. What amount should be reported as interest income for 202 O A.288,000 B.120,000 O C.96,000 O D.85,440

amount of P1,000,000. There is to established market value The interest rate on similar obligations is 12%, The present va three periods is .712. What amount should be reported as interest income for 202 O A.288,000 B.120,000 O C.96,000 O D.85,440

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 23P: Notes Receivable On January 1, 2019, Lisa Company sold machinery with a book value of 118,000 to...

See similar textbooks

Related questions

Q: A. Complete the table. Fil in the blanks of the table involving a simple interest. PRINCIPAL RATE…

A: Solution 1: Interest = P*R*T P210 = P8,000 * R * 7/12 Rate = P210*12/(8000*7) = 4.50%

Q: 1. A debt of P3,500 is to be amortized by 6 equal semiannual payments with interest at 6%compounded…

A: Debt amount (PV) = P 3500 Annual interest rate = 6% Semi annual interest rate (R) = 6%/2 = 3% Number…

Q: 93.000. The CCA rate for this asset is 32% The asset's useful life is two years after which it will…

A: Less refers to the owner of an asset who leases it out to a lessor in return for some interest.

Q: debt of $9179.58 is repaid by payments of $1797.52 in 4 months, $1295.22 in 16 months, and a final…

A: The debt should be equal to the present value of future payments to be paid in the future based on…

Q: On Jan 1, 20X1, ABC Corp received a P300,000 3-year note from a customer. The principal and interest…

Q: The APY of $1,000 invested at 6% with semiannual compounding is O 6.18% O 6.09% O 6.00% O 6.14%

A: Interest rate (r) = 6% Number of compounding per year (m) = 2

Q: A debt of $9179.58 is repaid by payments of $1797.52 in 4 months, $1295.22 in 16 months, and a final…

A: Given: Loan amount “L” = $9179.58 Payment in 4th month "P1"= $1797.52 Payment in 16th month "P2"=…

Q: The annual rate required for a principal of 12000 OMR to earn 1020 OMR annual interest is Select…

A: Interest is the amount received on the capital that is owed to the borrower or invested for some…

Q: The debt is amortized by the periodic payment shown Compute (a) the number of payments required to…

A: A loan is an agreement where one party receives an amount in exchange for paying it back later in…

Q: An amortization of a debt is in a form of a gradient series of ₱5,000 on the first year, ₱4,500 on…

A: The gradient series are: ₱5,000 on the first year ₱4,500 on the second year ₱4,000 on the third year…

Q: What is the present value of $4,010 to be received at the beginning of each of 29 periods,…

A: Present value of annuity due (n=29, i=5%) = 15.89813

Q: Complete the amortization table below of a loan of P 100,000 payable semi-annually after 5 years at…

A: Amortization schedule is the one that shows the periodic money that is to be paid on monthly or…

Q: P5-4 Future values For each of the cases shown in the following table, calculate the future value of…

A: Future Value refers to the value of the current asset or investment or of cash flows at a specified…

Q: What is the future value of 12 periodic payments of $1,000 each made at the beginning of each period…

A: Future value is the expected value of the current sum in a future date at a given rate of interest.…

Q: 5. P200,000 was deposited on Jan 1, 2008 at an interest rate of 24% compounded semi-annually. How…

A: Compound interest is the method to calculate the total amount on the investment in which the…

Q: A debt of P3,500 is to be amortized by 6 equal semiannual payments with interest at 6%compounded…

A: Debt amount (D) = P 3500 n = 6 payments r = 6% per annum = 3% semiannually Let the periodic payment…

Q: A time deposit of P 110, 000.00 for 31 days earns P 890.39 on maturity date after deducting the 20%…

A: Given: Principal = P110,000 Time period = 31 days Interest amount after withholding tax = P890.39…

Q: ABC Co. receives P210,000 3-year non-interest bearing note. Collections is on the principal and…

A: Note receivable is one of the current asset of the business. It means amount is to be received…

Q: ce of P1,500,000. Under the terms of the sale, the automobile dealer 00,000 cash and a promissory…

A: Maturity Value : It is the estimated income on the amount of investment for a given period. It is…

Q: Question6 On October 31,2020, farling Company negotiated a one year 100.000 kanc loan kom afgn barka…

A: Under Foreign exchange borrowing, loan and interest is adjusted as per foreign exchange rate as on…

Q: prainary payments of P1, 000 if interest rate is 1: annually. A P15,257.90 B P33,567.21

A: Ordinary annuities are a series of equal payments made at the end of each period for a specific time…

Q: Interest at j12-6% with monthly payments of .50 Calculate the missing amounts in the amortization…

A: Borrowings are the liability of the company which is used to finance the requirement of the funds.…

Q: What will be the compounded amount on a loan of P1.500 at 12% interest compounded quarterly for I…

A: Loan amount (PV) = P 1500 Annual interest rate = 12% Quarterly interest rate (R) = 12%/4 = 3% Period…

Q: On Jahuary 1, 2019, Bank Nizwa issued CD in Muscat Securities Market which will mature in October…

A: Face Value of CD =50000 Interest Rate =6% per annum Monthly Interest rate(r) =6%/12 = 0.5% Time (n)…

Q: S180.000 mortgage was amortized over 15 years by monthly repayments. The nerest rate on the mortgage…

A: Loans are paid by the monthly payments that carry the payment of interest and payment of principal…

Q: 1. January 1, 2020? a. 6,000,000 b. 5,000,000 c. 5,494,500 d. 3,850,000 2. What is the gain on…

A: Prevent value: Present value is the sum of the current value of money of future cash flows. It is…

Q: What is the present value of $39,000 to be received at the end of each of 20 periods, discounted at…

A: Time value of money: The money that is received today and in the future will be different this is…

Q: lated as $100,000 m has a Specific Construction Loan of $300,000 at 5 st per annum. voidable…

A: Avoidable Interest: It is the amount of interest cost on loan during the period, which is…

Q: On a 36-day basis, ir payment is made on the twentieth day under trade credit turms of 2/10, net 30.…

A: Liability: Liability is an obligation of any business. It is an amount borrowed by a business from…

Q: If total assets in $ are 750000 $, Equity 450000 $, the long term liabilities are 250000 $.…

A: Current assets means those assets which will be converted in to cash in near future generally one…

Q: Suppose $5,000 is invested for four years at 4.25% interest compounded quarterly. What is the future…

A: Investment (PV) = $ 5000 Annual interest rate = 4.25% Quarterly interest rate (r) = 4.25%/4 =…

Q: An amortization of a debt is in a form of a gradient series of P5,000 on the first year, P4,500 on…

Q: at t-5), various interest rates are applied: 4% for year 1; 6% for years 2 and ivalent net value at…

A: In this we have to determine net value at end of 5 years.

Q: A debt of P3,500 is to be amortized by 6 equal semiannual payments with interest at 6%compounded…

A: Debt amount (PV)= P 3,500 Number of payments (n) = 6 Interest rate = 6% Semi annual interest (r) =…

Q: A loan of R1 000 000,00 is granted for three years at a compound interest rate of 8,25% per annum…

A: Solution:- When an amount is borrowed, it can either be repaid as a lump sum payment or in…

Q: 3. A debt of P3,500 is to be amortized by 6 equal semiannual payments with interest at 6%compounded…

A: Debt amount (PV) = P 3500 Number of semi-annual payments (n) = 6 Interest rate = 6% Semi annual…

Q: If beginning and ending interest receivable were P16,000 and P5,000, respectively. Total interest…

A: Interest receivable is the amount which is yet to be received from the amount invested for example…

Q: The exact simple interest of P7,000 invested from April 28, 2002 to December 25, 2002 is P700. What…

A: Interest amount (i) = P700 Investment (P) = P7000 Period from Apr 28, 2002 to Dec 25, 2002 (t) = 241…

Q: *see attached What is the total unearned interest income? a. 3,052,705 b. 2,652,705 c. 2,252,705…

A: Lease means giving out the assets by lessor to lessee to use that assets in return of rent.…

Q: The value of annual(A) uniform payments over years 1-5 is equivalent to a payment schedule of 200,…

A: Given:

Q: Lang Warehouses borrowed $157,000 from a bank and signed a note requiring 2 annual payments of…

A: The question is based on the concept of Financial Accounting. Annuity refers to the series of equal…

Q: On December 31, 2021, Ainsley Company finished consultation services and accepted exchange a zero…

Q: Suppose that a party wanted to enter an FRA that expires in 121 days and is based on 56-day LIBOR.…

A: Given information: Notional amount : USD10,000,000 Rate quoted by dealer : 3.3% Rate at expiration:…

Q: followed by 17 payments of $5800 each at the begin of quarter. What interest rate il is being…

A: The time worth of cash draws from the possibility that reasonable financial backers like to get cash…

Q: What is the present value of 6 receipts of $10,000 each received at the beginning of each period,…

A: Present value = Annual amount receipt x Present value factor (9%. 6 years)

Q: If $10.000 is borrowed at 10% p.a. interest to be paid back over 10 annual installment, how much of…

A: Loan is a value which is borrowed from external sources for a certain period of time. This amount is…

Question

On January 1, 2020, Allure Company sold an equipment with a carrying amount of
P800,000, receiving a noninterest bearing note due in three years with a face
amount of P1,000,000. There is to established market value for the equipment.
The interest rate on similar obligations is 12%, The present value of 1 at 12% for
three periods is .712.
What amount should be reported as interest income for 2020/
A.288,000
B.120,000
C.96,000
D.85,440

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

On January 1, 2019, Park Company accepted a 36,000, non-interest-bearing, 3-year note from a major customer in exchange for used equipment. The equipment had originally cost Park 200,000 and had a book value of 20,000 on the date of the sale. At the 12% imputed interest rate for this type of loan, the present value of the note is 25,500 on January 1, 2019. Park uses the effective interest rate. What is the carrying value of the note receivable on Parks December 31, 2019, balance sheet? a. 28,560 b. 29,000 c. 32,500 d. 36,000
On January 1, 2019, Boater Company issues a 20,000 non-interest-bearing, 5-year note for equipment. Neither the fair value of the note nor the equipment is determinable. Boaters incremental borrowing rate is 9%. The asset has a useful life of 7 years. Prepare the journal entry for Boater to record the issuance of the note on January 1.
On August 1, 2019, Kern Company leased a machine to Day Company for a 6-year period requiring payments of 10,000 at the beginning of each year. The machine cost 40,000 and has a useful life of 8 years with no residual value. Kerns implicit interest rate is 10%, and present value factors are as follows: Present value for an annuity due of 1 at 10% for 6 periods4.791 Present value for an annuity due of 1 at 10% for 8 periods5.868 Kern appropriately recorded the lease as a sales-type lease. At the inception of the lease, the Lease Receivable account balance should be: a. 60,000 b. 58,680 c. 48,000 d. 47,910
On July 1, 2019, Aldrich Company purchased as an available-for-sale security 200,000 face value, 9% U.S. Treasury notes for 194,000. The notes mature July 1, 2020, and pay interest semiannually on January 1 and July 1. The notes were sold on December 1, 2019, for 199,000. Aldrich normally uses straight-line amortization on all of its notes. In its income statement for the year ended December 31, 2019, what amount should Aldrich report as a gain on the sale of the available-for-sale security? a. 2,500 b. 3,500 c. 5,000 d. 6,000
On January 1, 2018, King Inc. borrowed $150,000 and signed a 5-year, note payable with a 10% interest rate. Each annual payment is in the amount of $39,569 and payment is due each Dec. 31. What is the journal entry on Jan. 1 to record the cash received and on Dec. 31 to record the annual payment? (You will need to prepare the first row in the amortization table to determine the amounts.)
Notes Receivable and Income On January 1, 2019, Pitt Company sold a patent to Chatham Inc. which had a carrying value on Pitts books of 10,000. Chatham gave Pitt a 60,000, non-interest-bearing note payable in five equal annual installments of 12,000 with the first payment due and paid on January 1, 2020. There was no established price for the patent, and the note has no ready market value. The prevailing rate of interest for a note of this type at January 1, 2019, is 12%. Required: 1. Prepare a schedule showing the income or loss before income taxes that Pitt should record for the years ended December 31, 2019 and 2020. Show supporting computations in good form. 2. Next Level If Pitt inadvertently failed to discount the note and instead recorded it at its gross value, what would be the effect on income or loss before income taxes for the year ended December 31, 2019?
On January 1, Kilgore Inc. accepts a 20,000 non-interest-bearing, 5-year note from Dieland Company for equipment. Neither the fair value of the note nor the equipment is determinable. Kilgore had originally purchased the equipment for 18,000, and the equipment has a book value of 14,000 on January 1. Kilgore knows Dielands incremental borrowing rate of 9%. Prepare the journal entry for Kilgore to record the sale of the equipment on January 1.
On January 1, 2019, Northfield Corporation becomes delinquent on a 100,000, 14% note to First National Bank, on which 16,651 of interest has accrued. On January 2, 2019, the bank agrees to restructure the note. It forgives the accrued interest, extends the repayment date to December 31, 2021, and reduces the interest rate to 10%. Required: Prepare a schedule for Northfield to compute the annual interest expense in regard to the preceding note for each year of the restructuring agreement.
Spath Company borrows 75,000 by issuing a 4-year, noninterest-bearing note to a customer on January 1, 2019. In addition, Spath agrees to sell inventory to the customer at reduced prices over a 5-year period. Spaths incremental borrowing rate is 12%. The customer agrees to purchase an equal amount of inventory each year over the 5-year period so that a straight-line method of revenue recognition is appropriate. Required: Prepare the journal entries on Spaths books for 2019 and 2020. (Round answers to 2 decimal places.)
On October 1, 2019, Ball Company issued 9% bonds dated October 1, 2019, with a face amount of 200,000. The bonds mature in 10 years. Interest is paid semiannually on March 31 and September 30. The proceeds from the bond issuance were 205,294.53 to yield 8.6%. Ball Company has a December 31 fiscal year-end and does not use reversing entries. Required: 1. Prepare journal entries to record the issuance of the bonds and the interest payments for 2019 and 2020 using the effective interest method. 2. Prepare journal entries to record the issuance of the bonds and the interest payments for 2019 and 2020 using the straight-line method.
Notes Receivable On January 1, 2019, Lisa Company sold machinery with a book value of 118,000 to Mark Company. Mark signed a 180,000 non-interest-bearing note, payable in three 60,000 annual installments on December 31, 2019, 2020, and 2021. The fair value of the machinery was 149,211.12 on the date of sale. The machinery had been purchased by Lisa at a cost of 160,000. Required: 1. Prepare all the journal entries on Lisas books for January 1, 2019, through December 31, 2021. 2. Prepare the notes receivable portion of Lisas balance sheet on December 31, 2019 and 2020.
Brooks Company reported a prior period adjustment of 512,000 in pretax financial "income" and taxable income for 2020. The prior period adjustment was the result of an error in calculating bad debt expense for 2019. The current tax rate is 30%, and no change in the tax rate has been enacted for future years. When the company applies intraperiod income tax allocation, the prior period adjustment will be shown on the: a. income statement at 12,000 b. income statement at 8,400 (net of 3,600 income taxes) c. retained earnings statement at 12,000 d. retained earnings statement at 8,400 (net of 3,600 income taxes)