On January 1, 2017, Cheyenne Company issued a $1,224,300, 5-year, zero-interest-bearing note to Ayayai Bank. The note was issued to yield 8% annual interest. Unfortunately, during 2018 Cheyenne fell into financial trouble due to increased competition. After reviewing all available evidence on December 31, 2018, Ayayai Bank decided that the loan was impaired. Cheyenne will probably pay back only $816,200 of the principal at maturity.
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- On December 31, 2017, Firth Company borrowed $62,092 from Paris Bank, signing a 5-year, $100,000 zero-interest-rate note. The note was issued to yield 10% interest. Unfortunately, during 2019, Firth began to experience financial difficulty. As a result, at December 31, 2019, Paris Bank determined that it was probable that it would collect only $75,000 at maturity. The market rate of interest on loans of this nature is now 11%.Instructions(a) Prepare the entry (if any) to record the impairment of the loan on December 31, 2019, by Paris Bank.(b) Prepare the entry on March 31, 2020, if Paris learns that Firth will be able to repay the loan under the original terms.On December 31, 2020, Firth Company borrowed $62,092 from Paris Bank, signing a 5-year, $100,000 zero-interest-rate note. The note was issued to yield 10% interest. Unfortunately, during 2022, Firth began to experience financial difficulty. As a result, at December 31, 2022, Paris Bank determined that it was probable that it would collect only $75,000 at maturity. The market rate of interest on loans of this nature is now 11%. Instructions a. Prepare the entry (if any) to record the impairment of the loan on December 31, 2022, by Paris Bank. b. Prepare the entry on March 31, 2023, if Paris learns that Firth will be able to repay the loan under the original terms.Yolo Corporation experienced financial difficulty in 2020. It decided to go into note receivable discounting to be able to ease some of its financing problems. During 2020, the following transactions relating to it transpired: May 1 Discounted at the bank a 4-month, 10% interest bearing note receivable from a customer dated February 1, 2020, P400,000. Discount rate was 12%. June 1 Bank informed Yolo that the 4-month note was honored and paid by its issuer. June 30 Discounted at the bank an 8-month, non-interest bearing note receivable from a customer dated January 1, 2020, P200,000. Discount rate was 15% August 1 Discounted at the bank a 180-day, 12% interest bearing note receivable dated June 15, 2020, P300,000. Discount rate was 15%. September 5 The bank informed Yolo that the 8-month note was in default. The full maturity value and protest fee of P5,000 was paid by Yolo the next day. December 1 The customer paid the maturity value of the 8-month note, protest fee, and 10% interest…
- On December 31, 2017, Pharoah Co. sold equipment to Shamrock, Inc. Pharoah Co. agreed to accept a $590,000 zero-interest- bearing note due December 31, 2019, as payment in full. Shamrock, Inc. incorporated in 2017 and had very little credit history at the time of the transaction with Pharoah. Therefore, at that time, Shamrock typically borrowed funds at a rate of 12%. Pharoah has a long and positive credit history. Therefore, Pharoah has various lines of credit at 4%. (a) Your answer is partially correct. Prepare the journal entry to record the transaction of December 31, 2017, for Pharoah Co. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124.) Account Titles and Explanation Debit Credit Notes Receivable Sales RevenueOn December 31, 2017, Pharoah Co. sold equipment to Shamrock, Inc. Pharoah Co. agreed to accept a $380,000 zero-interest-bearing note due December 31, 2019, as payment in full. Shamrock, Inc. incorporated in 2017 and had very little credit history at the time of the transaction with Pharoah. Therefore, at that time, Shamrock typically borrowed funds at a rate of 11%. Pharoah has a long and positive credit history. Therefore, Pharoah has various lines of credit at 6%. Prepare the journal entry to record the transaction of December 31, 2017, for Pharoah CoOn December 31, 2017, Pharoah Co. sold equipment to Shamrock, Inc. Pharoah Co. agreed to accept a $590,000 zero-interest- bearing note due December 31, 2019, as payment in full. Shamrock, Inc. incorporated in 2017 and had very little credit history at the time of the transaction with Pharoah. Therefore, at that time, Shamrock typically borrowed funds at a rate of 12%. Pharoah has a long and positive credit history. Therefore, Pharoah has various lines of credit at 4%. (a) Co. (Credit account titles are automatically Prepare the journal entry to record the transaction of December 31, 2017, for indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124.) Account Titles and Explanation Debit Credit
- On December 31, 2020, Iva Majoli Company borrowed $62,092 from Paris Bank, signing a 5-year, $100,000 zero-interest-bearing note. The note was issued to yield 10% interest. Unfortunately, during 2022, Majoli began to experience financial difficulty. As a result, at December 31, 2022, Paris Bank determined that it was probable that it would receive back only $75,000 at maturity. The market rate of interest on loans of this nature is now 11%. Instructions a. Prepare the entry to record the issuance of the loan by Paris Bank on December 31, 2020. b. Prepare the entry, if any, to record the impairment of the loan on December 31, 2022, by Paris Bank.On December 31, 2017, Pharoah Co. sold equipment to Shamrock, Inc. Pharoah Co. agreed to accept a $590,000 zero-interest- bearing note due December 31, 2019, as payment in full. Shamrock, Inc. incorporated in 2017 and had very little credit history at th time of the transaction with Pharoah. Therefore, at that time, Shamrock typically borrowed funds at a rate of 12%. Pharoah has a lo and positive credit history. Therefore, Pharoah has various lines of credit at 4%. (a) - Your answer is partially correct. Prepare the journal entry to record the transaction of December 31, 2017, for Pharoah Co. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 fo the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124.) Account Titles and Explanation Debit Credit Notes Receivable Sales RevenueOn December 31, 2025, Sheridan Co. performed environmental consulting services for Hayduke Co. Hayduke was short of cash, and Sheridan Co. agreed to accept a $309,400 zero-interest-bearing note due December 31, 2027, as payment in full. Hayduke is somewhat of a credit risk and typically borrows funds at a rate of 11%. Sheridan is much more creditworthy and has various lines of credit at 7%. (a) Prepare the journal entry to record the transaction of December 31, 2025, for the Sheridan Co. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answers to O decimal places, e.g. 5,275. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries.) Date Dec. 31, 2025 Account Titles and Explanation Debit Credit
- On January 1, 2019, an entity was indebted to a bank under a P4,800,000, 10% loan. The loan was dated January 1, 2017 and was due on December 31, 2020. The annual interest was last paid on December 31, 2017. The entity was experiencing financial troubles and therefore the bank considered the loan impaired. The bank agreed to reduce last year's interest and the remaining two years interest payments to P200,000 each and delay all such payments on December 31, 2020. The present value of 1 at 10% for 2 periods is 0.83. The entity also reported the net realizable value of accounts receivable in the amounts of P1,000,000 and P1,200,000 on December 21, 2019 and 2018, respectively. It was also disclosed that the allowance for doubtful accounts on December 31, 2019 and 2018 were P100, 000 and P130,000 respectively. Credit sales amounted to P4,770,000 & collections from customers totaled P4,800,000. Certain accounts were written off during the year.What is the impairment on the loan for…On July 1, 2017, KYU Co. discounted a 90-day, P850,000, 12% note, received from a customer on June 1, 2017, with a bank at 16% on with recourse basis. The discounting is treated as a conditional sale. The bank uses 365 days per year in computing for discounts. On August 30, 2017 (maturity date), the maker of the note defaulted and the bank charged KYU Co. the maturity value of the note plus a P3,000 protest fee. How much is transferred to accounts receivable due to the dishonor?Buddy Mountain Corp. currently has an issued debenture outstanding with ING Bank. The note has a principal of $2.5 million, was issued at face value, an interest payable at 7%. The term of the debenture was 10 years and was issued on December 31, 2010. The current market rate of this debenture is 9%. Buddy Mountain Corp. has been experiencing financial difficulties and has asked ING Bank to restructure the note. Both Buddy Mountain and ING Bank prepare financial statements in accordance with IFRS. It is currently December 3, 2017 ING Bank has agreed to accept a building in exchange for relinquishing this debenture. This building has a carrying amount of $900,000 (original cost $3,000,000) and a fair value of $2 million. Assume that the bank had already recognized a loss on impairment Required: Prepare journal entries that Buddy Mountain Corp. and ING Bank would make for the restructuring.