On December 31, 2012, Grin Company finished consultation services and accepted inexchange a promissory note with a face value of P600,000, a due date of December 31, 2015,and a stated rate of 5%, with interest receivable at the end of each year. The fair value of theservices is not readily determinable and the note is not readily marketable. Under thecircumstances, the note is considered to have an appropriate imputed rate of interest of 10%.The following interest factors are provided:Interest RateTable Factors For Three Periods10%1.33100.751325%Future Value of 11.15763Present Value of 1.86384Future Value of Ordinary Annuity of 1Present Value of Ordinary Annuity of 13.152503.310002.723252.48685Instructions(a) Determine the present value of the note.(b) Prepare a Schedule of Note Discount Amortization for Green Company under the effectiveinterest method. (Round to whole dollars.)

Consultation Services are a very important in business perspective point of view. Basically in…

Answered: On December 31, 2012, Grin Company…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On January 1, 2017, Cheyenne Company issued a $1,224,300, 5-year, zero-interest-bearing note to Ayayai Bank. The note was issued to yield 8% annual interest. Unfortunately, during 2018 Cheyenne fell into financial trouble due to increased competition. After reviewing all available evidence on December 31, 2018, Ayayai Bank decided that the loan was impaired. Cheyenne will probably pay back only $816,200 of the principal at maturity.
655. On December 31, 2010, Green Company finished consultation services and accepted inexchange a promissory note with a face value of P300,000, a due date of December 31, 2013,and a stated rate of 5%, with interest receivable at the end of each year. The fair value of theservices is not readily determinable and the note is not readily marketable. Under the circumstances, the note is considered to have an appropriate imputed rate of interest of 10%The carrying amount of the note receivable as of December 31, 2020 isa. 262,694b. 247,920c. 300,000d. 273,953
Einhorn Industries believes it is not probable that Thaler Inc. will default on an account receivable, but given thepossibility of default, Einhorn believes it will collect $30,000 less than the receivable’s current carrying value onEinhorn’s balance sheet. Under current GAAP, how much impairment charge should Einhorn recognize?
On December 31, 2019, GMC had a document payable with a value in the $ 100,000 books. GMC has faced economic difficulties that have not allowed to meet the payment of this debt. Suppose that on the date mentioned the The bank agreed to change the terms of the loan as follows: the principal (maturity value) was reduced to $ 80,000, the expiration date was changed to 31 December 2022, and the contractual interest rate was reduced from 15% to 10%. Determine the effect of this restructuring of debt on the Net Income of GMC on 12/31/19. to. GMC is going to report a profit of $ 20,000. b. GMC will report a profit equal to 5% of the principal. c. GMC is going to report a profit of $ 4,000. d. When the terms of the contract are adjusted, the debtor does NOT report earnings.
6. On December 31, 2010, Chelsea Co. provides a service for its customer Villas Boas Co. inexchange for a promissory note requiring five annual payments of $1,000 each. The paymentsare to occur on December 31 of each year beginning on December 31, 2011. The note does notspecify any interest, and there is no market for the note. Based on the credit worthiness of VillasBoas Co. and the length of the note, it is estimated that Villas Boas Co. would have to pay 10%interest if it borrowed a similar amount from a bank. The amount of interest revenue recognizedby Chelsea for the year ended December 31, 2013 is:a. $174b. $249c. $317d. $347
18. On December 31, 2010, Chelsea Co. provides a service for its customer Villas Boas Co. inexchange for a promissory note requiring five annual payments of $1,000 each. The paymentsare to occur on December 31 of each year beginning on December 31, 2011. The note does notspecify any interest, and there is no market for the note. Based on the credit worthiness of VillasBoas Co. and the length of the note, it is estimated that Villas Boas Co. would have to pay 10%interest if it borrowed a similar amount from a bank. The income tax rate for Chelsea is 35%.The effect of the entries made on December 31, 2014 on net income is:a. $0b. An increase of $113c. An increase of $162d. A decrease of $162
On December 31, 2025, Sheridan Co. performed environmental consulting services for Hayduke Co. Hayduke was short of cash, and Sheridan Co. agreed to accept a $309,400 zero-interest-bearing note due December 31, 2027, as payment in full. Hayduke is somewhat of a credit risk and typically borrows funds at a rate of 11%. Sheridan is much more creditworthy and has various lines of credit at 7%. (a) Prepare the journal entry to record the transaction of December 31, 2025, for the Sheridan Co. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answers to O decimal places, e.g. 5,275. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries.) Date Dec. 31, 2025 Account Titles and Explanation Debit Credit
Yolo Corporation experienced financial difficulty in 2020. It decided to go into note receivable discounting to be able to ease some of its financing problems. During 2020, the following transactions relating to it transpired: May 1 Discounted at the bank a 4-month, 10% interest bearing note receivable from a customer dated February 1, 2020, P400,000. Discount rate was 12%. June 1 Bank informed Yolo that the 4-month note was honored and paid by its issuer. June 30 Discounted at the bank an 8-month, non-interest bearing note receivable from a customer dated January 1, 2020, P200,000. Discount rate was 15% August 1 Discounted at the bank a 180-day, 12% interest bearing note receivable dated June 15, 2020, P300,000. Discount rate was 15%. September 5 The bank informed Yolo that the 8-month note was in default. The full maturity value and protest fee of P5,000 was paid by Yolo the next day. December 1 The customer paid the maturity value of the 8-month note, protest fee, and 10% interest…
On March 11, 2022, FDNÁCCT Services issued to a lender a 120-day, non- interest-bearing P400,000 note for a down payment to purchase a delivery van. When was the maturity date of the note? Enter your answer as month/day/year. Examples: April 2, 2022 as 04/02/2022 [no spaces in between the /] May 15, 2022 as 05/15/2022 [no spaces in between the /]
Harmon, Inc. uses the aging of receivables method to account for the allowance of doubtful accounts and the recording of bad debt expense. Below is the aging of the accounts receivable along with the associated estimation of uncollectibility. a. Calculate the amount estimated to be uncollectible at the end of 2021. b. Record the year-end entry to record the bad debt expense if there was a credit balance of $12,000 in the Allowance for Doubtful Accounts at the end of 2021 before the year-end entry. c. Record the year-end entry to record the bad debt expense if there was a debit balance of $3,500 in the Allowance for Doubtful Accounts at the end of 2021 before the year-end entry. Harmon, Inc - Accounts Receivable Aging Balances - December 31, 2021 Total 1-30 Days 31-60 Days 61-90 Days 91-120 Days…
On December 31, 2017, Firth Company borrowed $62,092 from Paris Bank, signing a 5-year, $100,000 zero-interest-rate note. The note was issued to yield 10% interest. Unfortunately, during 2019, Firth began to experience financial difficulty. As a result, at December 31, 2019, Paris Bank determined that it was probable that it would collect only $75,000 at maturity. The market rate of interest on loans of this nature is now 11%.Instructions(a) Prepare the entry (if any) to record the impairment of the loan on December 31, 2019, by Paris Bank.(b) Prepare the entry on March 31, 2020, if Paris learns that Firth will be able to repay the loan under the original terms.
Fill in the blanks: On Jan 1, 2021, XYZ Co. sold a machine in exchange for a P1500,000, non-interest-bearing note receivable in a lump sum payment on December 31, 2024. The prevailing interest rate for this type of note is 10%. How much is the carrying amount of the note on January 1, 2021? How much is the unearned income on Dec 31, 2022? ( Previous Continue >

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