Answered: On May 15, FDN Trading signed a…

On May 15, FDN Trading signed a P150,000, 12 percent, 150-day note payable with the bank. The note was issued at a discount. How much cash did FDN Trading receive from this transaction?

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter17: Accounting For Notes And Interest

Section: Chapter Questions

Problem 3CE

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Concept explainers

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.

Question

acct8

On May 15, FDN Trading signed a P150,000, 12 percent, 150-day note payable with the bank.
The note was issued at a discount. How much cash did FDN Trading receive from this
transaction?

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