what's the best answe for problem 7-5 and 7-7 On December 31, 2021, Durable Bank has a loan receivableof P4,000,000 from a borrower that it is' carrying at faceProblem 7-7 (IAA)amount and is due on December 31, 2026.Interest on the loan is payable at 9% each December 31.The borrower paid the interest due on December 31, 202but informed the bank that it would probably miss the nexttwo years' interest payments because of financial difficulty.After that, the borrower is expected to resume the annualinterest payment but it would make the principal paymentone year late, with interest paid for that additional year atthe time of principal payment.Present value of 1 at 9%.917.842One periodTwo periodsThree periodsFour periodsFive periodsSix periods.772.708.650.596Required:1. Compute the present value of the loan receivable onDecember 31, 2021.2. Compute the impairment loss to be recognized onDecember 31, 20121.3. Prepare journal entries from 2021 to 2027. Problem 7-5 (IAA)Solvent Bank loaned P10,000,000 to a borrower on January1. 2019. The terms of the loan require principal payments ofP2,000,000 each year for 5 years plus interest at 8%.rtingCS onThe first principal and interest payment is due on December31, 2019. The borrower made the required payments onDecember 31, 2019 and December 31, 2020.000300000However, during 2021 the borrower began to experiencefinancial difficulties, requiring the bank to reassess thecollectibility of the loan.werrateOn December 31, 2021, the bank has determined that theremaining principal payments will be collected but thecollection of the interest is unlikely. The bank has accruedthe interest for 2021.Expected principal payments1,000,0002,000,0003,000,000December 31, 2022December 31, 2023December 31, 2024ononPresent value of 1 at 8%.93.86For one periodFor two periodsFor three periods.79neveRequired:1. Compute the impairment loss on the loan receivable.2. Prepare journal entries for 2021, 2022 and 2023.

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of P4,000,000 from a borrower that it is carrying at face of P4,000,000 from a borrower that it is carrying at 1ace amount and is due on December 31, 2026. The borrower paid the interest due on December 31, 2021 On December 31, 2021, Durable Bank has a loan receivable nterest on the loan is pavable at 9% each December 31. the next

of P4,000,000 from a borrower that it is carrying at face of P4,000,000 from a borrower that it is carrying at 1ace amount and is due on December 31, 2026. The borrower paid the interest due on December 31, 2021 On December 31, 2021, Durable Bank has a loan receivable nterest on the loan is pavable at 9% each December 31. the next

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter14: Long-term Liabilities: Bonds And Notes

Section: Chapter Questions

Problem 11E

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Short-Term Debt Expected to Be Refinanced On December 31, 2019, Atwood Table Company has 8 million of short-term notes payable owed to City National Bank. On February 1, 2020, Atwood negotiates a revolving credit agreement providing for unrestricted borrowings up to 6 million. Borrowings will bear interest at 1% over the prevailing prime rate, will have stated maturities of 120 days, and will be continuously renewable for 120-day periods for 4 years. Atwood plans to refinance as much as possible of the notes outstanding with the proceeds available from this agreement. Assume that Atwoods December 31, 2019, year-end financial statements are issued on March 30, 2020. Required: Prepare a partial December 31, 2019, balance sheet for Atwood showing how the 8 million short-term debt should be reported. Next Level What is the justification for allowing short-term debt that is expected to be refinanced to be classified as a long-term liability.
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