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- Note the following information. A line of credit is an agreement between a bank and a borrower by which the borrower can borrow any amount of money (up to a mutually agreed-upon maximum) at any time, simply by writing a check. Typically, monthly simple interest payments are required, and the borrower is free to make principal payments as frequently or infrequently as he or she wants. Usually, a line of credit is secured by the title to the borrower's house, and the interest paid to the bank by the borrower is deductible from the borrower's income taxes.James and Danna Wright did not have sufficient cash to pay their income taxes. However, they had previously set up a line of credit with their bank. On April 15, they wrote a check to the Internal Revenue Service on their line of credit for $10,352. The line's interest rate is 4.125%. (Round your answers to the nearest cent.) (a) Find the size of the required monthly interest payment.$ (b) The Wrights decided that it would be in their…Which one of the following is classified as a cash or cash equivalent? Select one: a. Prepaid insurance b. Restricted bank account that cannot be used for operations c. Bank overdraft d. Government debt investment with 30 days to maturity e. Post-dated chequeAssuming loan made by M Enterprises to Banco De Oro amounting to P350,000.00 payable in three years with a monthly interest of 1.05%. M enterprises issued 12 checks for 1 year and upon 3rd month, issued check was bounced. What could be the possible action of the drawee? Elaborate your answer with supporting data. What could be the possible violation of the above scenario where they would just escape the obligation to the said bank upon the rules of commercial/ personal credit?
- On January 1, 20x1, an entity obtains an 11%, ₱5,000,000 bank loan. The bank charges the entity an 8.74% nonrefundable loan origination fee. The principal on the loan matures on December 31, 20x4 but interest is due annually every December 31. Requirements: Compute for the initial carrying amount of the loan. Compute for the effective interest rate on the loan. Compute for the carrying amount of the loan on December 31, 20x1.Where the operating cycle extends beyond one year because of normal credit terms as in the case of installment sales. a. The entire receivables are classified as current with disclosure of the amount not realizable within one year b. The entire receivables are shown as noncurrent c. The portion due in one year is shown as current and the balance as noncurrent d. The entire receivables are not recorded2.Which of the following statements is valid? a. Net accounts receivable is not affected by a recovery of an account previously written off. b. A three year, non-interest bearing promissory note is initially recorded in the accounts at its face value. c. When individual customers' accounts have credit balances of material amounts, these amounts must be deducted from the debit balance in other customers' accounts in the statement of financial position. d. When the rate stated on a note is greater than the prevailing market rate of interest for similar obligations, the present value of the note at initial recognition is greater than its face value.
- The facility where banks advance loans to its customer’s up to a certain amount if there is no deposits in the current account.Pursuant to the Fair Credit Reporting Act, a consumer reporting agency must adopt reasonable procedures to ensure that ____________ a. open-end credit plans are fully disclosed b. consumers receive minimum warranty protection c. creditors do not regularly extend consumer credit to a debtor in an amount greater than $25,000 d. obsolete information does not appear on credit reports e. the annual percentage rate (APR) does not exceed the total finance chargeWhich of the following practices by a credit card company results in lower interest charges to the cardholder? The card company states interest as a monthly percentage rather than an annual percentage. The card company allows a grace period before interest is accrued. The card company allows cardholders to skip payments on their cards. The card company calculates finance charges from the date of purchase to the date the amount is paid.
- Before the end of the reporting period, MetaFace Company breaches a covenant under a long-term loan agreement with BookWorm Bank. The loan will be classified as _______________. CURRENT, provided BookWorm gives MetaFace, before the end of the reporting period, a grace period ending at least twelve months after the reporting period CURRENT, since the loan will be payable on demand NONCURRENT, provided BookWorm gives MetaFace, after the end of the reporting period but before issuance of financial statements, agreed not to demand payment even a breach has been made NONCURRENT, since MetaFace will plan to make up with the consequences of the breach of loan contractAssuming loan made by M Enterprises to Banco De Oro amounting to P350,000.00 payable in three years with monthly interest of 1.05%. M enterprises issued 12 checks for 1 year and upon 3rd month, issued check was bounced. What could be the possible violation on the above scenario where they would just escape the obligation to the said bank upon the rules of commercial/personal credit?A company that uses a bill facility to provide fiance for a period of two years: A. is exposed to interest-rate risk B. will not be required to make any payments until the end of the facility. C. will issue bank bills that mature in two years' time D. will initially receive the bill's face value. E. All of these.
