Reference no: EM132692555
Questions - What's the answer for these problems? Can You show me how to solve it?
Q1. Morale Company provided the following transactions:
March 14 Sole of Merchandise, P2,050,000 to a customer, FOB destination 2/10, n/30.
April 7 Receipt of a 60-day, 12% note dated April 5 from the customer. The face of the note was the amount of the invoice minus freight charge of P50,000 paid by the customer in connection with the March 14 sale.
April 20 The note of the customer was discounted with the bank at 15%.
June 4 Receipt of notification from bank that the customer dishonored the note. Accordingly, the entity paid the bank the amount due including protest fee and other charges of P10,000
July 4 Receipt of cash from the customer for the full amount of indebtedness plus interest on the original face value.
REQUIRED: Prepare journal entries to record the transactions assuming any discounting of note receivable is accounted for as a conditional sale with recognition of a contingent liability.
Q2. Mythical Company provided the following transactions:
April 5 Received from A, a customer P500,000, 60-day ,12% note, dated April 4, in payment of an account.
April 19 The note of A was discounted with the bank at 14%.
May 3 Received a P1,000,000, 30-day non interest bearing note dated May 1 from B, in payment of an account
May 16 The note of B was discounted with the bank at 12%.
May 25 Received from C, a customer, a P1,500,00, 60-day, 12% note dated May 15 and made by Company X. Gave the customer credit for the maturity value of the note less discount at 12%.
June 7 Received notice from the bank that the note of A was not paid on maturity.
Paid bank the amount due plus protest fee and other charges of P20,000.
June 15 Received a 60-day,12% note, P800,000 dated June 15, from D, a customer for sale of merchandise
June 18 Received full payment from A including interest of 12% on total amount due from maturity date of original note.
REQUIRED:
A. Prepare journal entries to record the transactions assuming any discounting of note receivable is accounted for as conditional sale with recognition of a contingent liability.
B. Prepare the necessary adjustments on June 30.