The Nile Group is owed $1,010,000 by Scorpion Enterprises under an 10% note with three years remaining to maturity. The prior year of interest was unpaid. Nile estimates credit losses with respect to this receivable and calculates that it will only receive amounts equal to a present value of $885.000. The journal entry that O'Hara would make to record this transaction would include a credit loss as bad debt expense in the amount of: Multiple Choice
Q: On December 31, 2021, the VKS Finance Company had a P3,000,000 note receivable from JP Company. The…
A: Computation of recoverable amount from note receivable on December 31, 2021: Year cashflow pv…
Q: Kwell Co. owes Kuto Bank P4,000,000 plus accrued interest of P360,000. The unamortized discount on…
A: Net value of equipment is original price minus accumulated depreciation and difference between net…
Q: Lucas Co. provides for bad debt expense at the rate of 1% of sales on account. The allowance for…
A: Bad debt expenses are those expenses which cannot be collectible from the debtor. Allowance for…
Q: Contina Co. owed Maunlad Bank a P3,000,000, three-year, 10% note payable dated January 1, 2012. The…
A: Restructuring in Notes Payable For the Restructuring of the Debt which are provided by the financial…
Q: This Company defaulted in two annual interest payments on its P4,000,000 loan. Because of the…
A: As per IFRS 9, Financial instruments, the interest expense on the financial liability is recognized…
Q: On December 31, 2021, LoL Co. was indebted to Garena Street Company on a P2M, 10% note. Only…
A: Debt Restructuring - It is kind of process which allows the public or private company facing cash…
Q: Suppose that on January 1, Year 1 a debtor owed a creditor a $6,573 (face) non-interest-bearing note…
A: On January 1st, year 1 Existing balance of not payable = 6573 credit in debtors books, hence entry…
Q: At January 1, 2020, Student Ltd owes Tultion Corp for a $120,000 note payable. The note bears…
A: Restructuring in accounting refers to the process of significant changes in financial statements…
Q: Due to extreme financial difficulties, Armand Company had negotiated a restructuring of a 10% P…
A: Annual interest expense = Carrying value of the bonds x market interest rate x no. of months/12…
Q: At January 1, 2016, Brainard Industries, Inc., owed Second BancCorp $12 million under a 10% note due…
A:
Q: On January 1, 2001, XDR Bank extended a P900,000 loan to SRN, Inc. Principal is due on December 31,…
A: Impairment loss means amount which will not be recovered from whom the loan was given. It is…
Q: Lolo Co. owes $150,000 in notes payable plus $12,000 of accrued interest to, the company is having…
A: The company can raise fund by borrowing the cash. If the cash is borrowed by issuing notes payable,…
Q: Johnson Co. accepts a note receivable from a customer in exchange for some damaged inventory. The…
A: Note: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question…
Q: On December 31, 2020, the Bato-bato Finance Company had P5,000,000 notes receivable from Burgundy…
A: An impairment loss is a loss that is incurred due to a decline in the value of an asset…
Q: On January 1, 20X9, Fast Bank made a P2,000,000, 8% loan. The P160,00O interest is receivable at the…
A: Given: Carrying value of Loan=$2,000,000Rate of loan =8%Interest receivable every year =$160,000PV…
Q: On July 31, 2021, JUNGKOOK Company borrowed from a bank via issuing a 13.2% note. Transaction costs…
A: Meaning of the note is that it is a legal document that acts as an IOU from the borrower to the…
Q: othschild Chair Company, was indebted to First Lincoln Bank under a $20 million, 10% unsecured note.…
A: Step 1 Journal is the part of book keeping.
Q: Marigold Corporation has elected to use the fair value option for one of its notes payable. The note…
A: Determine unrealized holding gain or loss.
Q: In 2X19, Land Corporation acquired land by paying P2,000,000 and signing a note with a face value of…
A: NOTE : As per BARTLEBY guidelines, when multiple sub parts are given then first three sub parts are…
Q: Kagome Company uses the allowance method of accounting for uncollectible accounts. During 2020,…
A: Answer) Calculation of Net Change in working capital A B A- B Accounts…
Q: COMPUTE TRINA'S INTEREST INCOME UNDER THE FOLLOWING SITUATION: The note is non-interest bearing, but…
A: Non-interest bearing promissory note is the note which itself denotes in the name that the holder of…
Q: Butler, Inc. paid $90,000 to retire a note with a face value of $99,600 . The note was issued with…
A: Given: Face value = $99,600 Net book value = $81,840 Amount paid = $90,000
Q: Due to adverse economic circumstances and poor management, Bontoc Company has negotiated a…
A: Working note: Computation of gain on restructuring of note payable:
Q: Larkspur Co. owes $202,500 to Cullumber Inc. The debt is a 10-year, 11% note. Because Larkspur Co.…
A: Gain on Land Disposition = fair value - book value = $146,600 - $92,800 = $53,800
Q: eceivable records were transferred to Buyer. 31 Buyer collected P234,000 during August…
A: Factoring is a type of finance technique, in which the company sells its receivables to another…
Q: Due to extreme financial difficulties, Armada Company has negotiated a restructuring of its 10%…
A: Calculation of total present value of new debt: = (Debt amount ×PVF @10%, 3 years) +(Debt…
Q: Due to extreme financial difficulties, ARMADA Company had negotiated a restructuring of a 10%…
A: Debt restructuring means restructuring the terms like maturity, interest rate etc. or to swap with…
Q: In 2X19, Land Corporation acquired land by paying P2,000,000 and signing a note with a face value of…
A: NOTE: As per BARTLEBY guidelines, when multiple sub parts are given then first three sub parts are…
Q: On December 31, 2019, Kale Bank entered into a debt restructuring agreement with Miserable Corp.,…
A: Ans. P 56,000 Working Notes: Principle : P 700,000 Rate of Interest: 8% Time : 1 Year
Q: Extended the maturity to December 31, 2X23. • The P480,000 interest due on December 31, 2X21 was…
A: NOTE : As per BARTLE BY guidelines, when multiple sub parts are given then the first three sub…
Q: EXO Company accepted a P400,000 face value, six-month, 9% note dated May 15 from a customer. After…
A: Interest accrued = face value of note x rate of interest x no. of months/12 = P400,000 x 9% x 2/12…
Q: On December 31, 2012, Greendale Corporation is experiencing extreme financial pressure and is in…
A: Debt Restructuring: Businesses and individuals that want to avoid being placed on the defaulters'…
Q: On December 31 , 2018 Nicholas Co. is in financial difficulty and cannot pay a note due that day .…
A: (Note: We’ll answer the first question since the exact one wasn’t specified. Please submit a new…
Q: Due to extreme financial difficulties, Armada Company had negotiated a restructuring of a 10%…
A: Total Present value of New Debt = Present value of New Debt + Present Value of Interest on New Debt…
Q: The balance in the Debtors Control account at the end of the financial year was R30 000 before the…
A: Formula: Provision for bad debts = Total Debtors balance x Provision for bad debts percentage.
Q: On January 1, 2020, Wilson Co. signed a three year note with Chase Bank. The note was for $10…
A: FASB (Financial Accounting Standards Board) is a body that sets accounting standards in accordance…
Q: On December 31, 2020, the Reliable Finance Company had P5,000,000 notes receivable from Burgundy…
A: Impairment loss refers to the substantial decline in the carrying value of asset. It is calculated…
Q: Due to extreme financial difficulties, Aries Company negotiated a restructuring of a 10%,…
A:
Q: On July 31, 2021, ABC Company borrowed from a bank via issuing a 13.2% note. Transaction costs of…
A: No expense in 2020 because no point related to the 2020 year. Where as in 2021 the interest expense…
Q: At January 1, 2018, Brainard Industries, Inc., owed Second BancCorp $12 million under a 10% note due…
A: 1.
Q: Company received from a customer a one-year, P500,000 note bearing annual interest of 8%. After…
A: The company will sell the products at cash or at credit. If the company sells the product at credit,…
Q: Gottlieb Co. owes $199,800 to Ceballos Inc. The debt is a 10-year, 11% note. Because Gottlieb Co. is…
A: a.
Q: CPA Co. received from a customer a one-year, P1,000,000 note bearing annual interest of 10%. After…
A: Factoring is the financial institution where firm can sell their account receivable at a discount…
Q: What is the gain on extinguishment for 2020? *
A: Solution:- Given, Due to extreme financial difficulties, Armand Company had negotiated a…
Q: On December 31, 2012, Greendale 2 Corporation is experiencing extreme financial pressure and is in…
A: Gain on debt restructuring = Carrying amount of old loan - Present Value of Restructure Liability
Q: On January 1, 2020, Wilson Co. signed a three year note with Chase Bank. The note was for $10…
A: ANSWER Accounting Standards Codification (ASC) 470-60 is the section that defines how Wilson…
Q: At January 1, 2018, NCI Industries, Inc., was indebted to First Federal Bank under a $240,000, 10%…
A: 1 ) Calculation of Present value of debt = ( $240,000 + ( $240,000 x 10 % ) )…
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- On January 1, Kilgore Inc. accepts a 20,000 non-interest-bearing, 5-year note from Dieland Company for equipment. Neither the fair value of the note nor the equipment is determinable. Kilgore had originally purchased the equipment for 18,000, and the equipment has a book value of 14,000 on January 1. Kilgore knows Dielands incremental borrowing rate of 9%. Prepare the journal entry for Kilgore to record the sale of the equipment on January 1.On September 30, Franz Corporation notices a decline in value of its investment in held-to-maturity bonds. On that date, the carrying value of the bonds is 38,500 and the fair value is 22,980. Franz evaluation of this investment reveals that expected credit losses are 10,000. Prepare the journal entry to record the impairment.On January 1, 2019, Northfield Corporation becomes delinquent on a 100,000, 14% note to First National Bank, on which 16,651 of interest has accrued. On January 2, 2019, the bank agrees to restructure the note. It forgives the accrued interest, extends the repayment date to December 31, 2021, and reduces the interest rate to 10%. Required: Prepare a schedule for Northfield to compute the annual interest expense in regard to the preceding note for each year of the restructuring agreement.
- At the end of 20-3, Martel Co. had 410,000 in Accounts Receivable and a credit balance of 300 in Allowance for Doubtful Accounts. Martel has now been in business for three years and wants to base its estimate of uncollectible accounts on its own experience. Assume that Martel Co.s adjusting entry for uncollectible accounts on December 31, 20-2, was a debit to Bad Debt Expense and a credit to Allowance for Doubtful Accounts of 25,000. (a) Estimate Martels uncollectible accounts percentage based on its actual bad debt experience during the past two years. (b) Prepare the adjusting entry on December 31, 20-3, for Martel Co.s uncollectible accounts.Whirlie Inc. issued $300,000 face value, 10% paid annually, 10-year bonds for $319,251 when the market of interest was 9%. The company uses the effective-interest method of amortization. At the end of the year, the company will record ________. A. a credit to cash for $28,733 B. a debit to interest expense for $31,267 C. a debit to Discount on Bonds Payable for $1,267 D. a debit to Premium on Bonds Payable for $1.267Jars Plus recorded $861,430 in credit sales for the year and $488,000 in accounts receivable. The uncollectible percentage is 2.3% for the income statement method, and 3.6% for the balance sheet method. A. Record the year-end adjusting entry for 2018 bad debt using the income statement method. B. Record the year-end adjusting entry for 2018 bad debt using the balance sheet method. C. Assume there was a previous debit balance in Allowance for Doubtful Accounts of $10,220, record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method. D. Assume there was a previous credit balance in Allowance for Doubtful Accounts of $5,470, record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method.
- Millennium Associates records bad debt using the allowance, income statement method. They recorded $299,420 in accounts receivable for the year, and $773,270 in credit sales. The uncollectible percentage is 3.2%. On February 5, Millennium Associates identifies one uncollectible account from Molar Corp in the amount of $1,330. On April 15, Molar Corp unexpectedly pays its account in full. Record journal entries for the following. A. Year-end adjusting entry for 2017 bad debt B. February 5, 2018 identification entry C. Entry for payment on April 15, 2018Accrued Interest On May 1, the Garnett Corporation wanted to purchase a $200,000 piece of equipment, but Garnett was only able to furnish $75,000 of its own cash to purchase the equipment. Garnett borrowed the remainder of the $200,000 from the Peoples National Bank on a 3-year, 4% note. Required: If the company keeps its records on a calendar year, what adjusting entry should Garnett make on December 31?Bristax Corporation recorded $1,385,660 in credit sales for the year, and $732,410 in accounts receivable. The uncollectible percentage is 3.1% for the income statement method and 4.5% for the balance sheet method. A. Record the year-end adjusting entry for 2018 bad debt using the income statement method. B. Record the year-end adjusting entry for 2018 bad debt using the balance sheet method. C. Assume there was a previous debit balance in Allowance for Doubtful Accounts of $20,550; record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method. D. Assume there was a previous credit balance in Allowance for Doubtful Accounts of $17,430; record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method.
- Income, Cash Flow, and Future Losses On January L 2017, Cermack National Bank loaned 55,000,000 under a 2-year, zero coupon note to a real estate developer. The bank recognized interest revenue on this note of approximately $400,000 per year. Due to an economic downturn, the developer was unable to pay the $5,800,000 maturity amount on December 31, 2018. The bank convinced the developer to pay $800,000 on December 31, 2018, and agreed to extend $5,000,000 credit to the developer despite the gloomy economic outlook for the next several years. Thus, on December 31, 2018, the bank issued a new 2-year, zero coupon note to the developer to mature on December 31, 2020, for $6,000,000. The bank recognized interest revenue on this note of approximately $500,000 per year. The banks external auditor insisted that the riskiness of the new loan be recognized by increasing the allowance for uncollectible notes by $1,500,000 on December 31, 2018, and $2,000,000 on December 31, 2019. On December 31, 20201 the bank received $1,200,000 from the developer and learned that the developer was in bankruptcy and that no additional amounts would be recovered. Required: Prepare a schedule showing the effect of the notes on net income in each of the 4 years.Income, Cash Flow, and Future Losses On January L 2017, Cermack National Bank loaned 55,000,000 under a 2-year, zero coupon note to a real estate developer. The bank recognized interest revenue on this note of approximately $400,000 per year. Due to an economic downturn, the developer was unable to pay the $5,800,000 maturity amount on December 31, 2018. The bank convinced the developer to pay $800,000 on December 31, 2018, and agreed to extend $5,000,000 credit to the developer despite the gloomy economic outlook for the next several years. Thus, on December 31, 2018, the bank issued a new 2-year, zero coupon note to the developer to mature on December 31, 2020, for $6,000,000. The bank recognized interest revenue on this note of approximately $500,000 per year. The banks external auditor insisted that the riskiness of the new loan be recognized by increasing the allowance for uncollectible notes by $1,500,000 on December 31, 2018, and $2,000,000 on December 31, 2019. On December 31, 20201 the bank received $1,200,000 from the developer and learned that the developer was in bankruptcy and that no additional amounts would be recovered. Required: 1. Prepare a schedule showing annual cash flows fur the two notes in each of the 4 years.Income, Cash Flow, and Future Losses On January L 2017, Cermack National Bank loaned 55,000,000 under a 2-year, zero coupon note to a real estate developer. The bank recognized interest revenue on this note of approximately $400,000 per year. Due to an economic downturn, the developer was unable to pay the $5,800,000 maturity amount on December 31, 2018. The bank convinced the developer to pay $800,000 on December 31, 2018, and agreed to extend $5,000,000 credit to the developer despite the gloomy economic outlook for the next several years. Thus, on December 31, 2018, the bank issued a new 2-year, zero coupon note to the developer to mature on December 31, 2020, for $6,000,000. The bank recognized interest revenue on this note of approximately $500,000 per year. The banks external auditor insisted that the riskiness of the new loan be recognized by increasing the allowance for uncollectible notes by $1,500,000 on December 31, 2018, and $2,000,000 on December 31, 2019. On December 31, 20201 the bank received $1,200,000 from the developer and learned that the developer was in bankruptcy and that no additional amounts would be recovered. Required: Which figure, net income or net cash flow, does the better job of telling the banks stock-holders about the effect of these notes on the bank? Explain by reference to the schedules prepared in Requirements 1 and 2.