On December 31, 2020, Stellar Company signed a $ 1,022,000 note to Pearl Bank. The market interest rate at that time was 11%. The stated interest rate on the note was 9%, payable annually. The note matures in 5 years. Unfortunately, because of lower sales, Stellar’s financial situation worsened. On December 31, 2022, Pearl Bank determined that it was probable that the company would pay back only $ 613,200 of the principal at maturity. However, it was considered likely that interest would continue to be paid, based on the $ 1,022,000 loan.
Q: On January 1,2021, Josh Co. sold a machine to Groban Co. In lieu of cash payment, Groban gave josh a…
A: “Since you have posted a question with multiple sub-parts, we will solve first three subparts for…
Q: On January 1, 2016, Harrieth Bank, Inc. approved the loan to Marideth Company for P 5,000,000. The…
A: Present value of a loan can be referred as the existing value of future outflows of a loan. In order…
Q: During 2020 Hingalo Company experienced financial difficulties and is likely to default on a…
A: This question deals with the calculation of gain of extinguishment of debt. Gain on extinguishment…
Q: On December 31, 2020, JKL Bank granted a P5,000,000 loan to a borrower with 10% stated rate payable…
A: Face value of loan = P5,000,000 Stated interest rate = 10% Market interest rate = 12% The interest…
Q: On October 1, 2020, Kingbird Equipment Company sold a pecan-harvesting machine to Valco Brothers…
A: Interest is paid on October, so From Oct 1 to Dec 31 = 3 months. Annual Interest = 169,200*8% =…
Q: On December 31, 2016, London Bank granted a P5,000,000 loan to borrower with 10% stated rate payable…
A: Debt restructuring is the process in which the lender of the money negotiates with the borrower…
Q: On December 31,2020, Sheridan Company signed a $1,228,500 note to Skysong Bank. The market interest…
A: A loan is a contractual relationship in which a creditor lends money to another company in exchange…
Q: On January 1, 2020, Billy Company sold equipment that originally cost $5,000,000 to Selecta Company.…
A: It is the amount of difference between the face value of the bond issued and the amount actually…
Q: Barely Oats manufactures organic oatmeal and has been in business for five years. They want to…
A: 1) Amount receivable on January 1, 2020 for issue of note = Maturity value / (1+r)^n =>2,200,000…
Q: McCormick Corporation issued a 4-year, $40,000, 5% note to Greenbush Company on January 1, 2020, and…
A: Given: Note payable - 40,000 Due period - 4 years Stated interest rate - 5% Market interest rate -…
Q: On December 31, 2021, Oregon Bank recorded an investment of P5,000,000 in a loan granted to a…
A: Given investment value = P5,000,000
Q: Cheyenne Corporation issued a 4-year, $31,000, 4% note to Greenbush Company on January 1, 2020, and…
A: Date Accounts title and explanation Debit Credit Calculations 1-Jan-20 Computer $24,268…
Q: On January 1, 2020, Oceanic Bank made a P1,000,000 8% loan. The P80,000 interest is receivable at…
A: Computation:
Q: On December 31, 2019, Panda Bank recorded an investment of P5,000,000 in a loan granted to a client.…
A: Impairment losses arise when the present value is less than the carrying value. For example:…
Q: On January 1,2021, Josh Co. sold a machine to Groban Co. In lieu of cash payment, Groban gave josh a…
A: Depreciation: It is the gradual fall in the value of the asset due to its normal usage in the…
Q: On December 31, 2020, Firth Company borrowed $62,092 from Paris Bank, signing a 5-year, $100,000…
A: Borrowed amount = $ 62092 Interest to yield = 10% Market rate of interest is 11% On December 31 ,…
Q: What amount should be reported as gain from extinguishment of debt in the 2020 income statement?
A: This question belongs to the loan and notes payable. Due to the financial crisis faced by the…
Q: On January 1, 2016, Harrieth Bank, Inc. approved the loan to Marideth Company for P 5,000,000. The…
A:
Q: On December 31, 2020, Conchita Martinez Company signed a $1,000,000 note to Sauk City Bank. The…
A: Formula sheet for the above calculation is shown below: To open the "PV function" window - MS-Excel…
Q: During 2021, PUMPKIN Company experienced financial difficulties and is likely to default on a…
A: Total payable amount = Principal + Interest payment for year 2021…
Q: On January 1, 2020, VKS Incorporated sold its aggregate equipment. The buyer issued a promissory…
A: Principal Outstanding Principal amount received Interest Total amount received PV factor…
Q: On December 31, 2020, Pronghorn Company signed a $1,284,300 note to Stellar Bank. The market…
A: PVIF stands for Present value interest factor is the formula that is used in order to compute the…
Q: On December 31, 2021, LOL Company is experiencing extreme financial pressure and is in default in…
A: Debt restructuring is a process of modification in the terms of a loan obtained by a debtor from the…
Q: What is the interest income for 2022? Beach Bank loaned Boracay Company P7,500,000 on January 1,…
A: The term impairment refers to a situation when the fair value of the asset reduces below the…
Q: Due to extreme financial difficulties, Armada Company has negotiated a restructuring of its 10%…
A:
Q: On December 31, 2018, Conchita Martinez Company signed a P1,000,000 noninterest bearing note to Sauk…
A: Carrying amount refers to the cost of an asset less the accumulated depreciation.
Q: On December 31, 2020, London Bank granted a P5,000,000 loan to a borrower with 10% stated rate…
A: Loan is described as an amount which is lent by the lender or financial institution to the borrower…
Q: On January 1, 2020, CPA Incorporated sold its aggregate equipment. The buyer issued a promissory…
A: Principal Outstanding Principal amount received Interest Total amount received PV…
Q: On January 1, 2020, Oceanic Bank made a P1,000,00ó 8% loan. The P80,000 interest is receivable at…
A: Since interest will be paid at the end of the 5 year loan term, no amount should be reported as…
Q: On December 31, 2017, Firth Company borrowed $62,092 from Paris Bank, signing a 5-year, $100,000…
A: (a) Prepare the entry (if any) to record the impairment of the loan on December 31, 2019, by Paris…
Q: On January 1, 2011, ACB Inc. gave a loan to XYZ Enterprises amounting to P100,000 and received a two…
A: ABC gave a loan to XYZ enterprise on 01-01-2011 Amount of loan given= P100,000 Interest rate 6% ABC…
Q: During 2021, PUMPKIN Company experienced financial difficulties and is likely to default on a…
A: Here in this question, we are required to calculate how much gain or loss should recorded on…
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: On December 31, 2018, Conchita Martinez Company signed a P1,000,000 noninterest bearing note to Sauk…
A: The computation of amortization schedule is shown below,
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, JKL Bank granted a P5,000,000 loan to a borrower with 10% stated rate payable…
A: Loan is a value which is taken from the other sources like banks and this amount is repaid later…
Q: On December 31, 2021, Cholo Bank recorded an investment of P 5,000,000 in a loan granted to a…
A: Annual interest = Loan amount x interest rate x no. of year = P5,000,000 x 10% x 1 year = P500,000
Q: The Schitt Company borrowed $900 on January 1, 2020 at an annual rate of interest of eight percent.…
A: Interest Expense - Interest Expense is the amount payable on the borrowed money. It is the expense…
Q: On December 31, 2021, London Bank granted a P5,000,000 loan to a borrower with 10% stated rate…
A: Impairment loss: A less of the fair value of assets as compared to its carrying value (book value)…
Q: On December 31, 2021, London Bank granted P5,000,000 loan to a borrower with 10% atated rate payable…
A: Given information, Principal =5,000,000 Interest at 10% Present value of 1 at 12% is 0.57 for five…
Q: gain or loss from extinguishment of debt i
A: Gain or loss from extinguishment of debt = (Amount of note payable + Accrued interest) - Cash…
Q: 2024. Scenario B: The terms of the note were modified on June 30, 2022. The principal is reduced by…
A: Computation of amount of liability after modification of terms:
Q: nt value of an ordinary annuity of 1 at 12% is 3.60 for five periods and 2.40 for three periods.…
A: Revenue recognition may be defined as a principle which says that revenue will be recorded in books…
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: On December 31, 2020, Sweet Company signed a $1,278,400 note to Pharoah Bank. The market interest…
A: Calculation of Amount of cash Pharaoh received from the loan on December 31, 2020. Particulars…
Q: On December 31, 2018, Conchita Martinez Company signed a P1,000,000 noninterest bearing note to Sauk…
A: Calculate Interest received in 2019. Calculate Interest revenue for 2019.
Q: On January 1, 2020, Billy Company sold equipment that originally cost $5,000,000 to Selecta Company.…
A:
Q: At January 1, 2021, Brainard Industries, Inc., owed Second BancCorp $26 million under a 10% note due…
A: (1)
On December 31, 2020, Stellar Company signed a $ 1,022,000 note to Pearl Bank. The market interest rate at that time was 11%. The stated interest rate on the note was 9%, payable annually. The note matures in 5 years. Unfortunately, because of lower sales, Stellar’s financial situation worsened. On December 31, 2022, Pearl Bank determined that it was probable that the company would pay back only $ 613,200 of the principal at maturity. However, it was considered likely that interest would continue to be paid, based on the $ 1,022,000 loan.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- Charles Wilson Company sells 8% bonds having a maturity value of $1,910,000 for $1,765,190.00. The bonds are dated January 1, 2025, and mature January 1, 2030. Interest is payable annually on January 1. Click here to view factor tables.Problem: ABC Company issued a promissory note to RCBC Bank. Details from the promissory note are as follows: Date of note: November 1, 2020 Term of note: 180 days Principal: P120,000 Interest rate: 12% Determine the following: 1. What is the account to be credited on the adjusting entry on December 31, 2020? 2. How much is the amount to be credited on December 31, 2020? 3. How much is the total interest expense for the full term of the note.Current Attempt in Progress Starr Corporation loaned W90,000 to another corporation on December 1, 2022 and received a 3-month, 6% interest-bearing note with a face value of W90,000. What adjusting entry should Starr make on December 31, 2022? O Debit Cash and credit Interest Receivable, W1,350. O Debit Interest Receivable and credit Interest Revenue, W450. O Debit Interest Receivable and credit Interest Revenue, W1,350. O Debit Cash and credit Interest Revenue, W450.
- Blue Spruce Corporation issued $440,000, 6%, 20-year bonds on January 1, 2022, for $393.386. This price resulted in an effective interest rate of 7% on the bonds. Interest is payable annually on January 1. Blue Spruce uses the etfective-interest method to amortize bond premium or discount. (a) Your answer is correct. Prepare the journal entry to record the issuance of the bonds. (Credit account titles are automatically indented when amount s entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Jan. 1. 2022 Cash Dicntn Bonds Payable 46614 440000 lon Ple eTextbook and MediaProblem 5: The following selected accounts were taken from the trial balance of Romen Company as December 31, 2020: 750,000 150,000 450,000 2,700,000 525,000 3,900,000 30,000 150,000 240,000 900,000 1,800,000 4,460,000 222,000 393,600 150,000 2,787,500 Accounts receivable Installment receivable – 2018 Installment receivable - 2019 Installment receivable – 2020 Beginning inventory Purchases Freight-in Repossessed merchandise @ NRV Repossession loss Cash sales Credit sales Installment sales Deferred gross profit – 2018 Deferred gross profit – 2019 Operating expenses Cost of installment sales Additional information: a. Gross profit rate for 2018 and 2019 installment sales were 30% and 32%, respectively. b. The entry for repossessed goods was: Repossessed Merchandise Repossession loss Installment Receivable – 2018 150,000 240,000 180,000 210,000 c. Merchandise on hand at the end of 2020 (new and repossessed) was 282,000. Installment Received - 2019 Required: Compute for the following : 1.…Problem 1 On September 1, 2020, Rayhak Company assigned specific receivables totaling to P750,000 to Pak Bank as a collateral on a P625,000, 12% loan. Rayhak will continue to collect the assigned accounts receivable. The bank also assessed a 2% service charge on the total accounts receivable assigned. Rayhak is to make monthly payments to the bank with the cash collected on the assigned accounts receivable. Collections of assigned account during September 2020totaled P260,000 gross of cash discounts amounting to P3,500. Prepare all the e journal entries relating to the problem for the month of September 2020. (Books of Rayhak)
- 65. Borrowed P100,000 by issuing a 1-year note with 7% annual interest to Century Savings Bank on October 1, 2021. What is the adjusting entry on December 31, 2021? A. Debit: Interest Expense and Credit: Interest Payable P1,750 B. Debit: Interest Expense and Credit. Interest Payable P7,000 C. Debit: Interest Expense and Credit: Interest Payable P3,500 D. Debit: Interest Expense and Credit: Interest Payable P5,250Entries for notes payable Bull City Industries is considering issuing a $100,000, 7% note to a creditor on account. Assume a 360-day year. If an amount box does not require an entry, leave it blank. a. If the note is issued with a 45-day term, journalize the entries to record: the issuance of the note. the payment of the note at maturity. 1. fill in the blank a37cc101b03af8c_2 fill in the blank a37cc101b03af8c_3 fill in the blank a37cc101b03af8c_5 fill in the blank a37cc101b03af8c_6 2. fill in the blank a37cc101b03af8c_8 fill in the blank a37cc101b03af8c_9 fill in the blank a37cc101b03af8c_11 fill in the blank a37cc101b03af8c_12 fill in the blank a37cc101b03af8c_14 fill in the blank a37cc101b03af8c_15 b. If the note is issued with a 90-day term, journalize the entries to record: the issuance of the note. the payment of the note at maturity. 1. fill in the blank addbbd064fa6f8c_2 fill in the blank addbbd064fa6f8c_3 fill in…Hide or show questions Progress:28/29 items Determine the due date and amount of interest due at maturity on the following notes. Assume 360 days per year. OriginationDate FaceAmount Termof Note InterestRate MaturityDate InterestAmount a. Mar. 15 $8,000 60 days 9% $fill in the blank 2 b. May 1 $12,000 90 days 8% $fill in the blank 4
- Kingbird Corporation issued $460,000, 8%, 20-year bonds on January 1, 2022, for $418,008. This price resulted in an effective- interest rate of 9% on the bonds. Interest is payable annually on January 1. Kingbird uses the effective-interest method to amortize bond premium or discount. (a) Your answer is correct. Prepare the journal entry to record the issuance of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually) Date Jan. 1, 2022 Account Titles and Explanation Cash Discount on Bonds Payable Bonds Payable Debit 418008 41992 Credit 460000Assume the following information regarding a note received by HEERHUM YU Company:Principal amount of note receivable P1,500,000Date of note October 1, 2020Term of note 120 daysDate of discounting December 1, 2020Discount rate 12%Interest income for 120 days P50,000How much loss on discounting is to be recognized on December 1, 2020?PROBLEM 6: HILO CORP. had the following long-term receivable account balances at December 31, 2019 Note receivable from sale of division P4,500,000 1,200,000 Note receivable from officer Transactions during 2020 and other information relating to Hilo’s long-term receivables were as follows: 1. The P4,500,000 note receivable is dated May 1, 2019, bears interest at 9%, and represents the balance of the consideration received from the sale of Hilo's electronics division to Bahag Co. Principal payments of P1,500,000 plus appropriate interest are due on May 1, 2020, 2021, and 2022. The first principal and interest payment was made on May 1, 2020. Collection of the note installments is reasonably assured. 2. The P1,200,000 note receivable is dated December 31, 2019, bears interest interest at 8%, and is due on December 31, 2022. The note is due from Emiliana Barracuda, president of Hilo Co. Interest is payable annually on December 31 and interest payments were paid on their due dates through…