On April 1, 2020, Aljean Company discounted with recourse a 9-month, 10% note dated January 1, 2020 with face amount of P6,000,000. The bank discount rate is 12%. The discounting transaction is accounted for as a conditional sale with recognition of contingent liability. On October 1, 2020, the maker dishonored the note receivable. The entity paid the bank the maturity value of the note plus protest fee of P50,000. On December 31, 2020, the entity collected the dishonored note receivable in full plus 12% annual interest on the total amount due. 1. What amount was received from the note receivable discounting on April 1, 2020? a. 6,063,000 b. 6,450,000 c. 6,150,000 d. 5,963,000 2. What amount should be recognized as loss on note receivable discounting? 450,000 b. 387,000 87,000 а. с. d. 63,000 3. What is the total amount collected from the customer on December 31, 2020? a. 6,450,000 b. 6,500,000 c. 6,695,000 d. 6,662,500 4. If the discounting is secured borrowing, what is included in the journal entry to record the transaction? a. Debit loss on note receivable discounting P87,000 b. Debit interest expense P87,000 c. Credit liability for note discounted P6,063,000 d. Credit interest income P63,000
On April 1, 2020, Aljean Company discounted with recourse a 9-month, 10% note dated January 1, 2020 with face amount of P6,000,000. The bank discount rate is 12%. The discounting transaction is accounted for as a conditional sale with recognition of contingent liability. On October 1, 2020, the maker dishonored the note receivable. The entity paid the bank the maturity value of the note plus protest fee of P50,000. On December 31, 2020, the entity collected the dishonored note receivable in full plus 12% annual interest on the total amount due. 1. What amount was received from the note receivable discounting on April 1, 2020? a. 6,063,000 b. 6,450,000 c. 6,150,000 d. 5,963,000 2. What amount should be recognized as loss on note receivable discounting? 450,000 b. 387,000 87,000 а. с. d. 63,000 3. What is the total amount collected from the customer on December 31, 2020? a. 6,450,000 b. 6,500,000 c. 6,695,000 d. 6,662,500 4. If the discounting is secured borrowing, what is included in the journal entry to record the transaction? a. Debit loss on note receivable discounting P87,000 b. Debit interest expense P87,000 c. Credit liability for note discounted P6,063,000 d. Credit interest income P63,000
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
Chapter6: Cash And Receivables
Section: Chapter Questions
Problem 15P: Comprehensive Receivables Problem Blackmon Corporations December 31, 2018, balance sheet disclosed...
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Question
If the discounting is secured borrowing, what is included in the
record the transaction?
a. Debit loss on note receivable discounting Ᵽ87,000
b. Debit interest expense Ᵽ87,000
c. Credit liability for note discounted Ᵽ6,063,000
d. Credit interest income Ᵽ63,000
Transcribed Image Text:Problem 9-12 (IAA)
On April 1, 2020, Aljean Company discounted with recourse
a 9-month, 10% note dated January 1, 2020 with face amount
of P6,000,000. The bank discount rate is 12%.
The discounting transaction is accounted for as a
conditional sale with recognition of contingent liability.
On October 1, 2020, the maker dishonored the note
receivable. The entity paid the bank the maturity value of
the note plus protest fee of P50,000.
On December 31, 2020, the entity collected the dishonored
note receivable in full plus 12% annual interest on the total
amount due.
1. What amount was received from the note receivable
discounting on April 1, 2020?
a. 6,063,000
b. 6,450,000
c. 6,150,000
d. 5,963,000
2. What amount should be recognized as loss on note
receivable discounting?
a. 450,000
b. 387,000
с.
87,000
d.
63,000
3. What is the total amount collected from the customer on
December 31, 2020?
a. 6,450,000
b. 6,500,000
с. 6,695,000
d. 6,662,500
4. If the discounting is secured borrowing, what is
included in the journal entry to record the transaction?
a. Debit loss on note receivable discounting P87,000
b. Debit interest expense P87,000
c. Credit liability for note discounted P6,063,000
d. Credit interest income P63,000
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