An entity accepted from a customer in settlement of an account a P4,000, 000. 90-day 12% note dated August 31, 2019. On September 30, 20119, the entity discounted the note at 15% with recourse at the bank. The note was paid in full by the maker on maturity. The discounting is accounted for as a conditional sale with recognition of a contingent liability. 1. What amount was received from the note receivable discounting? a. 4,017,000 b. 4,120,000 c. 4,103,000 d. 3,965,500 2. What is the loss on note receivable discounting? а. 40,000 b. 23,000 с. 17,000 d. 20,000

An entity accepted from a customer in settlement of an account a P4,000, 000. 90-day 12% note dated August 31, 2019. On September 30, 20119, the entity discounted the note at 15% with recourse at the bank. The note was paid in full by the maker on maturity. The discounting is accounted for as a conditional sale with recognition of a contingent liability. 1. What amount was received from the note receivable discounting? a. 4,017,000 b. 4,120,000 c. 4,103,000 d. 3,965,500 2. What is the loss on note receivable discounting? а. 40,000 b. 23,000 с. 17,000 d. 20,000

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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What is the impact of writing off a $500 account under the allowance method on Net Realizable Value?
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(3-4.) The following terms of payment for an annuity are as follows: Periodic payment = 20,000 Payment interval = 1 month Interest rate = 18% compounded monthly Terms = 15 years
Face value of a note payable plus interest is called Omaturity value. O face value. O proceeds. Oprincipal.
19.Which of the following statements is incorrect? a. Trade receivables are recognized simultaneously with the recognition of related revenue when the criteria for revenue recognition are met. b. Under the gross price method, sales discounts are reported as a deduction from sales revenue. c. When accounts receivable are pledged against borrowing, the amount of accounts receivable pledged shall be included in the total receivables with disclosures. d. When discounting notes, the term discount period refers to the period of time that the note has been held by the endorser or payee; i.e. the period from the date of the note up to the date of discounting.
Which of the following statement is true about a noninterest-bearing note? Group of answer choices The amount of interest earned is based on the nominal interest when note was received. Interest stated on the face of the note is also the effective interest. The amount of interest earned is based on the effective interest when note was received. The amortization of discount is the amount of interest received during the period.
4. Which of the following statements about promissory notes is incorrect? a. Interest is the revenue to the maker of the note b. The party making the promise to pay is the debtor c. The party to whom payment is to be made is the creditor d. The maturity date of the note is the date when final payment of the note is due
42.What is "recourse" as it relates to transfer or sale of receivables? a. The obligation of the endorser/seller of the receivables to pay the endorsee/purchaser in case the debtor fails to pay. b. The obligation of the endorsee/purchaser of the receivables to pay the endorser/seller in case the debtor fails to pay. c. The obligation of the endorser/seller of the receivables to pay the endorsee/purchaser in case the debtor returns the product related to the sale. d. The obligation of the endorsee/purchaser of the receivables to pay the endorser/seller if all of the receivables are collected.
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