Loans and Receivables - Long Term (Problems/Lecture)
Loans and Receivables – Long Term
PROBLEMS
1. Smart Company has P3,000,000 note receivable from sale of plant bearing interest at 12% per annum. The note is dated June 1, 2008. The note is payable in 3 annual installments of P1,000,000 plus interest on the unpaid balance every June 1. The initial principal and interest payment was made on June 1, 2009.
The interest income for 2009 is a. P300,000 c. P210,000 b. P290,000 d. P140,000 rro 1. Trans Company sold a tract of land to Former Co. on July 1, 2009, for P8,000,000 under an installment sale contract. Former Co. signed a 4-year 11% note for P5,600,000 on July 1, 2009, in addition to the down payment of P2,400,000. The equal annual payments of principal and interest on the note will be P1,805,000 payable on July 1, 2010, 2011, 2012,and 2013. The land had an established cash price of P8,000,000, and its cost to the company was P6,000,000. The collection of the installments on this note is reasonably assured.
The current portion of the installment note receivable on December 31, 2010 is a. P1,805,000 c. P1,319,790 b. P1,400,000 d. P1,189,000 rro 1. At the beginning of 2007, Marcos Company received a three-year non-interest-bearing P1,000,000 trade note. Marcos reported this note as a P1,000,000 trade note receivable on its 2007 year-end statement of financial position and P1,000,000 as sales revenue for 2007. What effect did this accounting for the note have on Marcos's profit for 2007, 2008, 2009, and its retained earnings at the end of 2009, respectively? a. Overstate, overstate, understate, no effect b. Overstate, understate, understate, no effect c. Overstate, understate, understate, understate d. No effect, no effect, no effect, no effect
1. Pagudpud Company received a seven-year zero-interest-bearing note on February 22, 2009, in exchange for property it sold to Rear Company. There was no established exchange price for this property and the note
PROBLEMS
1. Smart Company has P3,000,000 note receivable from sale of plant bearing interest at 12% per annum. The note is dated June 1, 2008. The note is payable in 3 annual installments of P1,000,000 plus interest on the unpaid balance every June 1. The initial principal and interest payment was made on June 1, 2009.
The interest income for 2009 is a. P300,000 c. P210,000 b. P290,000 d. P140,000 rro 1. Trans Company sold a tract of land to Former Co. on July 1, 2009, for P8,000,000 under an installment sale contract. Former Co. signed a 4-year 11% note for P5,600,000 on July 1, 2009, in addition to the down payment of P2,400,000. The equal annual payments of principal and interest on the note will be P1,805,000 payable on July 1, 2010, 2011, 2012,and 2013. The land had an established cash price of P8,000,000, and its cost to the company was P6,000,000. The collection of the installments on this note is reasonably assured.
The current portion of the installment note receivable on December 31, 2010 is a. P1,805,000 c. P1,319,790 b. P1,400,000 d. P1,189,000 rro 1. At the beginning of 2007, Marcos Company received a three-year non-interest-bearing P1,000,000 trade note. Marcos reported this note as a P1,000,000 trade note receivable on its 2007 year-end statement of financial position and P1,000,000 as sales revenue for 2007. What effect did this accounting for the note have on Marcos's profit for 2007, 2008, 2009, and its retained earnings at the end of 2009, respectively? a. Overstate, overstate, understate, no effect b. Overstate, understate, understate, no effect c. Overstate, understate, understate, understate d. No effect, no effect, no effect, no effect
1. Pagudpud Company received a seven-year zero-interest-bearing note on February 22, 2009, in exchange for property it sold to Rear Company. There was no established exchange price for this property and the note