INTERMEDIATE ACCOUNTING(LL)-W/2 ACCESS
9th Edition
ISBN: 9781260180657
Author: SPICELAND
Publisher: MCG
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Chapter 21, Problem 21.7BE
To determine
Statement of cash flows: This statement reports all the cash transactions which are responsible for inflow and outflow of cash, and result of these transactions is reported as ending balance of cash at the end of reported period.
Journal: Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system
Rules of Debit and Credit:
Following rules are followed for debiting and crediting different accounts while they occur in business transactions:
- Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.
- Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.
To Journalize: The given transaction of Company M, to determine the amount related to the note.
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PROBLEM 8
On January 1, 2022, Clark Co. received a P3,000,000, 10% note from a customer upon the sale of its goods. The
note is to be paid in six equal semi-annual installments, plus interest on the outstanding balance every June 30 and
December 31, starting June 30, 2021. The effective rate on the note is 9%.
1. How much is the note upon initial recognition?
2. How much is the interest income recognized by Clark in 2022?
3. How much is the carrying amount of the note on December 31, 2023?
Problem 10
On December 31, 2020, Olaer Company received two P5,000,000 notes receivable from customers in exchanged for consulting services rendered. On both notes, interest is calculated on the outstanding principal balance at the annual rate of 4% and payable at maturity. The note from Nazareno Corporation, made under customary trade terms, is due on October 1, 2021 and the note from Mudag Corporation is due on December 31, 2025. The market interest rate for similar notes on December 31, 2020 was 10%. The compound interest factors to convert future value into present value at 10% follow: present value of 1 due in nine months, 0.93, and present value of 1 due in five years, 0.62.
1. At what amounts should these two notes receivable be reported in Nazareno’s December 31, 2020 statement of financial position?
2. At what amounts should these two notes receivable be reported in Mudag’s December 31, 2020 statement of financial position?
Problem 14-5A (Algo) Installment notes LO C1
On January 1, 2021, Norwood borrows $540,000 cash from a bank by signing a five-year installment note bearing 7% interest. The
note requires equal payments of $131,701 each year on December 31.
Required:
1. Complete an amortization table for this installment note.
2. Prepare the journal entries in which Norwood records the following:
(a) Norwood borrows $540,000 cash by signing a five-year, 7% installment note.
(b) Record the first installment payment on December 31, 2021.
(c) Record the second installment payment on December 31, 2022.
Complete this question by entering your answers in the tabs below.
Req 1
Req 2
Complete an amortization table for this installment note.
Note: Round your intermediate calculations to the nearest dollar amount.
Period Ending
Date
Beginning
Balance
Debit Interest
Expense
Debit Notes
Payable
Credit Cash
Ending Balance
12/31/2021
12/31/2022
12/31/2023
12/31/2024
12/31/2025
Total
Chapter 21 Solutions
INTERMEDIATE ACCOUNTING(LL)-W/2 ACCESS
Ch. 21 - Effects of all cash flows affect the balances of...Ch. 21 - Prob. 21.2QCh. 21 - Prob. 21.3QCh. 21 - Prob. 21.4QCh. 21 - Prob. 21.5QCh. 21 - Prob. 21.6QCh. 21 - Prob. 21.7QCh. 21 - The sale of stock and the sale of bonds are...Ch. 21 - Does the statement of cash flows report only...Ch. 21 - Prob. 21.10Q
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