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Q: interest income
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Q: gain or loss from extinguishment of debt i
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- It is February 16, 2020, and you are auditing Davenport Corporation's financial statements for 2019 (which will be issued in March 2020). You read in the newspaper that Travis Corporation, a major customer of Davenport, is in financial difficulty. Included in Davenports accounts receivable is 50,000 (a material amount) owed to it by Travis. You approach Jim Davenport, president, with this information and suggest that a reduction of accounts receivable and recognition of a loss for 2019 might be appropriate. Jim replies, Why should we make an adjustment? Ted Travis, the president of Travis Corporation, is a friend of mine; he will find a way to pay us, one way or another. Furthermore, this occurred in 2020, so lets wait and see what happens; we can always make an adjustment later this year. Our 2019 income and year-end working capital are not that high; our creditors and shareholders wouldnt stand for lower amounts than they already are. Required: From financial reporting and ethical perspectives, prepare a response to Jim Davenport regarding this issue.Marmol Corporation uses the allowance method for bad debts. During 2019, Marmol charged 50,000 to bad debt expense and wrote off 45,200 of uncollectible accounts receivable. These transactions resulted in a decrease in working capital of: a. 0 b. 4,800 c. 45,200 d. 50,000Ali Coffee Bean assumes that due to Corona, at the end of September 2020 there will be bad debts of $5,000,000 from accounts receivable belonging to Budi's Coffee Shop amounting to $20,000,000. It turned out that on October 21, 2020, Budi's Coffee Shop stated that they were unable to pay their receivables amounting to $1,000,000, so the CEO of Ali Coffee Bean allowed to write-off the receivables. As Ali Coffee Bean's financial staff, make:a. Journal Entry for write-off of Budi's Coffee Shop.b. What was the cash realizable value of Ali Coffee Shop's receivables prior to the write-off of Budi's Coffee Shop receivables in September?c. What is the cash realized value of Ali Coffee Shop's receivables after the write-off of Budi's Coffee Shop receivables?
- On January 1,2018, Ronaldo Co. Received a ₱1,000,000 note receivable from Quirante Inc. Principal payments of ₱200,000 and interest at 10% are due annually at the end of each year for 5 years. The first payment starts on December 31,2018. Quirante, Inc. made the required payments during 2018 and 2019. However, during 2020, Quirante Inc. Began to experience financial difficulties, requiring Ronaldo Co. to reassess the collectability of the note. Interest was accrued in impaired and projects that only the remaining principal is collectible. The expected future cash flows are as follows: Expected date of collection Amount of cash flow December 31,2021 ₱140,000 December 31,2022 200,000 December 31,2023 260,000 The amount of impairment loss in 2020 based on these cash flows was ₱212,108. On December 31,2021, Quirante’s credit rating has improved and the loan was then again restructured. After receiving the scheduled collection on December 31,2021, the present value of the remaining…At the end of 2024, Garcia Company’s balance for Accounts Receivable is $11,000, while the company’s total assets equal $1,410,000. In addition, the company expects to collect all of its receivables in 2025. In 2025, however, one customer owing $2,600 becomes a bad debt on March 14. Record the write off of this customer’s account in 2025 using the direct write-off method. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)During 2021, PUMPKIN Company experienced financial difficulties and is likely to default on a ₱5,000,000, 15% three-year note dated January 1, 2019, payable to Summit Bank. On December 31, 2021, the bank agreed to settle the note and unpaid interest of ₱750,000 for 2021 for ₱4,100,000 cash payable on January 31, 2022. What amount should PUMPKIN report as gain or loss from extinguishment of debt in its 2021 income statement?
- During 2021, PUMPKIN Company experienced financial difficulties and is likely to default on a ₱5,000,000, 15% three-year note dated January 1, 2019, payable to Summit Bank. On December 31, 2021, the bank agreed to settle the note and unpaid interest of ₱750,000 for 2021 for ₱4,100,000 cash payable on January 31, 2022. What amount should PUMPKIN report as gain or loss from extinguishment of debt in its 2021 income statement? (If gain, maintain as is; if loss, put a negative (-) sign before the numerical figure)During 2021, PUMPKIN Company experienced financial difficulties and is likely to default on a ₱5,000,000, 15% three-year note dated January 1, 2019, payable to Summit Bank. On December 31, 2021, the bank agreed to settle the note and unpaid interest of ₱750,000 for 2021 for ₱4,100,000 cash payable on January 31, 2022. What amount should PUMPKIN report as gain or loss from extinguishment of debt in its 2021 income statement? (If gain, maintain as is; if loss, put a negative (-) sign before the numerical figure) * ANSWER IN GOOD ACCOUNTING FORM. THANK YOU :)On December 31 , 2018 Nicholas Co. is in financial difficulty and cannot pay a note due that day . It is a $3,300,000 8% issued at par note, payable to Key Bank. Key Bank agrees to accept from Nicholas equipment that has a fair value of 1,450,000, originally costing $2,400,000, with accumulated depreciation of $1,250,000. Key Bank also extends the maturity date to December 31, 2021, reduces the face amount of the note to $1,250,000, and reduces the interest rate to 6%, with interest payable at the end of each year. a. Nicholas should recognize a gain or loss on the transfer of the equipment of: b. At the end of each of the next three years Nicholas records the $ 75,000 interest paid to Key Bank as a: c. In determining the carrying value of the note at December 31, 2018 Key Bank uses an effective interest rate equal to: d. Key Bank records a loss on restructuring of: e. In recording the loss on restructuring, Key bank:
- At December 31, 2019, one of TOCINO Company’s credit customers, HOTDOG Trading, is experiencing financial difficulties. As a result, HOTDOG Trading has missed the payment of the principal amount of its notes payable of P3, 000, 000 and accrued interest for the year is P300, 000. A restructuring arrangement was approved by the management of TOCINO Company, as follows:❖ The principal was reduced to P2, 000, 000 and will be due on December 31, 2021;❖ Accrued interest of P300, 000 is condoned;❖ Interest rate is reduced to 8% payable on December 31, 2020 and December 31, 2021.The prevailing market interest rate for similar instrument at the time of restructuring (December 31, 2019) is 12%. What is the impairment loss to be recognized on December 31, 2019? (use four decimal places for the PV factor)a. P 0 c. P1, 369, 520b. P 1, 157, 432 d. P1, 447, 184On January 1, 2020, the balances of Jennifer Cakes and Pastries accounts receivable and allowance for doubtful accounts amounted to P50,000 and P15,000, respectively.During the year, the Company sold P500,000 worth of pastries and P800,000 worth of cakes on credit. The collections on these amounted to 80% for pastries and 60% for cakes.At year-end, the Company determined that the beginning balance of the accounts receivable was deemed uncollectible and hence, written off. Recoveries and collections of previously written off amounted to P10,000. The Company's policy is to recognize 5% of its credit sales as doubtful accounts. On December 31, 2020, what is the net realizable value of Jennifer Cakes and Pastries' accounts receivable?. Single choice. P355,000 P380,000 P365,000 P390,000On December 31, 2021 Mickey Mouse Corporation has been experiencing financial difficulty due to pandemic. Minnie Mouse Corporation had a Note Receivable from Mickey Mouse Corporation amounting to P5,000,000 which bears an interest of 10%. It also has an accrued interest of P500,000. Mickey Mouse Corporation and Minnie Mouse had an agreement to modify the notes. The following is the modification terms.- Reduction of Principal to P4,000,000- Reduction of interest to 8% payable annually beginning December 2022.- Principal payment is was reset to be paid on December 31, 2023.How much is the interest income on December 31, 2022? choices: 386,004 393,956 320,000 300,000
