The Company entered into the following transactions in connection with its business operations as dealer of auto supplies and related services: i. Sold second hand spare tires to Doubtful Liner (DL) in exchange for promissory note with face value of P120,000, payable after 2 years. The note bear interest of 6%, payable annually, when the prevailing rate of interest at the time of sale was 12%. ii. Rendered significant volume of auto repair services to Dispair Trading in exchange with another promissory note with face value of P210,000. The notes issued by DT is non-interest bearing, payable in 3 years and the services rendered has cash equivalent price of P175,000. How much revenue should be recognized by the Company on the year of sale?

The Company entered into the following transactions in connection with its business operations as dealer of auto supplies and related services: i. Sold second hand spare tires to Doubtful Liner (DL) in exchange for promissory note with face value of P120,000, payable after 2 years. The note bear interest of 6%, payable annually, when the prevailing rate of interest at the time of sale was 12%. ii. Rendered significant volume of auto repair services to Dispair Trading in exchange with another promissory note with face value of P210,000. The notes issued by DT is non-interest bearing, payable in 3 years and the services rendered has cash equivalent price of P175,000. How much revenue should be recognized by the Company on the year of sale?

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter12: Current Liabilities

Section: Chapter Questions

Problem 7EA: Homeland Plus specializes in home goods and accessories. In order for the company to expand its...

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Homeland Plus specializes in home goods and accessories. In order for the company to expand its business, the company takes out a long-term loan in the amount of $650,000. Assume that any loans are created on January 1. The terms of the loan include a periodic payment plan, where interest payments are accumulated each year but are only computed against the outstanding principal balance during that current period. The annual interest rate is 8.5%. Each year on December 31, the company pays down the principal balance by $80,000. This payment is considered part of the outstanding principal balance when computing the interest accumulation that also occurs on December 31 of that year. A. Determine the outstanding principal balance on December 31 of the first year that is computed for interest. B. Compute the interest accrued on December 31 of the first year. C. Make a journal entry to record interest accumulated during the first year, but not paid as of December 31 of that first year.
Jada Company had the following transactions during the year: Purchased a machine for $500,000 using a long-term note to finance it Paid $500 for ordinary repair Purchased a patent for $45,000 cash Paid $200,000 cash for addition to an existing building Paid $60,000 for monthly salaries Paid $250 for routine maintenance on equipment Paid $10,000 for extraordinary repairs If all transactions were recorded properly, what amount did Jada capitalize for the year, and what amount did Jada expense for the year?
28. CPA Company entered into the following transactions in connection with its business operations as dealer of auto supplies and related services:i. Sold second hand spare tires to Doubtful Liner (DL) in exchange for promissory note with face value of P120,000, payable after 2 years. The note bear interest of 6%, payable annually, when the prevailing rate of interest at the time of sale was 12%.ii. Rendered significant volume of auto repair services to Dispair Trading in exchange with another promissory note with face value of P210,000. The notes issued by DT is non-interest bearing, payable in 3 years and the services rendered has cash equivalent price of P175,000. How much revenue should be recognized by CPA Company on the year of sale? (Round of present value factors to 4 decimal places, and final answer to nearest peso.)
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Jade Larson Antiques owes $20,000 on a truck purchased for use in the business. Assume the company makes timely principal payments of $5,000 each year at December 31 plus interest at 8%. Which of the following is true? a. After the first payment is made, the company owes $15,000 plus three years’ interest. b. After the first payment, $15,000 would be shown as a long-term liability. c. After the first payment is made, $5,000 would be shown as the current portion due on the long-term note. d. Just before the last payment is made, $5,000 will appear as a long-term liability on the balance sheet.
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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…
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