Otter Company has a receivable amounting to P1,200,000; Otter had previously established an Allowance for bad debts of P50,000 in connection with these receivables. Ötter Company sold these receivables with recourse for P1,060,000. Otter received P1,000,000 cash immediately from the factor. The remaining P60,000 will be received once the factor verifies that none of the receivables is in dispute. Control was surrendered by Otter. The fair value of the recourse obligation is P26,000. The loss on factoring to be recognized by Otter Company is
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- 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. 50,000The Statement of Affairs for Ivan Corporation shows that approximately P0.78 on the peso probably will be paid to unsecured creditors without priority. The corporation owes JICR Company P23,000 on a promissory note, plus accrued interest on P940. Inventories with a current fair value of P19,200 collateralized the note payable. Compute the amount that JICR Company should receive from Ivan Corporation assuming that the actual payments to unsecured creditors without priority consist of 78% of total claims.On February 1, 2020, Henson Company factored receivables with a carrrrying amount of $700,000 to Agee Company. Agee Company assesses a finance charge of 3% of the receivables and retains 5% of the receivables. Relative to this transaction, you are to determine the amount of loss on sale to be reported in the income statement of Henson Company for February. Assume that Herson factors the receivables on a with recourse basis. The recourse obligation has a fair value of $3,500. The loss to be reported is ?
- In 2X19, Land Corporation acquired land by paying P2,000,000 and signing a note with a face value of P6,000,000. On the note’s due date, December 31, 2X21, Land owed P480,000 of accrued interest and P6,000,000 on the note. Land was in financial difficulty and was unable to make any payments. To solve the problem, Land and the bank agreed to amend the note as follows: • Extended the maturity to December 31, 2X23. • The P480,000 interest due on December 31, 2X21 was forgiven. • Land Corporation would be required to make an annual interest payment of P540,000 every December 31 starting 2X22. • Transaction cost incurred that is directly related to the debt restructuring was P16,850. As of December 31, 2X21, the yield rate based on the restructured debt and after considering the amount of transaction cost is 6.24%. 5. What type of debt restructuring is being described by the case? 6. What is the total gain from restructuring? 7. What amount should Land Corporation report…In 2X19, Land Corporation acquired land by paying P2,000,000 and signing a note with a face value of P6,000,000. On the note’s due date, December 31, 2X21, Land owed P480,000 of accrued interest and P6,000,000 on the note. Land was in financial difficulty and was unable to make any payments. To solve the problem, Land and the bank agreed to amend the note as follows: • Extended the maturity to December 31, 2X23. • The P480,000 interest due on December 31, 2X21 was forgiven. • Land Corporation would be required to make an annual interest payment of P540,000 every December 31 starting 2X22. • Transaction cost incurred that is directly related to the debt restructuring was P16,850. As of December 31, 2X21, the yield rate based on the restructured debt and after considering the amount of transaction cost is 6.24%. 8. What is the carrying amount of the obligation that should be reported in 2X22 statement of financial position? 9. Provide the journal entry for debt…In 2X19, Land Corporation acquired land by paying P2,000,000 and signing a note with a face value of P6,000,000. On the note’s due date, December 31, 2X21, Land owed P480,000 of accrued interest and P6,000,000 on the note. Land was in financial difficulty and was unable to make any payments. To solve the problem, Land and the bank agreed to amend the note as follows: • Extended the maturity to December 31, 2X23. • The P480,000 interest due on December 31, 2X21 was forgiven. • Land Corporation would be required to make an annual interest payment of P540,000 every December 31 starting 2X22. • Transaction cost incurred that is directly related to the debt restructuring was P16,850. As of December 31, 2X21, the yield rate based on the restructured debt and after considering the amount of transaction cost is 6.24%. 5. What type of debt restructuring is being described by the case? 6. What is the total gain from restructuring? 7. What amount should Land Corporation report…
- The Abra Company owes P200,000 on a note payable plus P8,000 in interest to its bank. The note is scoured by inventory with a book value of P160,000 and a fair value of P120,000. What amount will the bank received if unsecured creditors receive 75% of their claims?On May, 2020, Manara Company factored receivables of $200,000 to National Company. National Company assesses a finance charge of 4% of the receivables and retains 7% of the receivables. Assume that Manara Company factors the receivables on a without guarantee (without recourse) basis. The loss on sales of receivables to be reported is:On January 1, 2017, Lombard Co. sells property forwhich it had paid $690,000 to Sargent Company, receivingin return Sargent’s zero-interest-bearing note for$1,000,000 payable in 5 years. What entry would Lombardmake to record the sale, assuming that Lombardfrequently sells similar items of property for a cash salesprice of $640,000?
- Tasa Incorporated after having experienced financial difficulties in 2021, negotiated with a major creditor and arrived at an agreement to restructure a note payable on December 31, 2021. The creditor was owed a principal of P3,600,000 and interest of P400,000 but agreed to accept equipment worth 850,000 and a note receivable from Tasa's customer with carrying amount of P2,700,000. The equipment had an original cost of P900,000 and an accumulated depreciation of 300,000. a.What amount should be recognized as gain from extinguishment of debt on December 31, 2021?On February 1, 2021, JANE Company factored receivables with a carrying amount of ₱300,000 to JACK Company. JACK Company assesses a finance charge of 3% of the receivables and retains 5% of the receivable for possible sales returns. Relative to this transaction, you are to determine the amount of loss on sale or factoring to be reported in the income statement of JANE Company for February. Assume that JANE factors the receivables on a without recourse basis. 1.) The loss to be reported is? * a. 24,000 b. 0 c. 15,000 d. 9,000 2.) The amount of cash initially to be received is? a. 276,000 b. 300,000 c. 285,000 d. 291,000ABC Company after having experienced financial difficulties in 2020 negotiated with a major creditor and arrived at an agreement to restructure its notes payable on December 31, 2020. The creditor was owed principal of P3,600,000 and interest of P400,000 but agreed to accept an equipment worth P700,000 and notes receivable from an ABC Company's customer with carrying amount of P2,700,000. The equipment had original cost of P900,000 and accumulated depreciation of P300,000. How much should be recognized as gain from debt restructuring on December 31, 2020? Round answer to whole number.