Reference no: EM132986143
Questions -
Q1. Complete solution with explanation. 1. Franco, Inc. received fro. A customer a one-year, P1,000,000 note bearing annual interest of 8%. After holding the note for six months, Franco discounted the note at Lylia Bank at an effective interest rate of 10%.
- What amount of cash did Franco received from the bank?
- How much is the loss on discounting?
Q2. On December 1, 2020, Hanabi Company received a P100,000 60-day, 6% note from a customer. On December 31, 2020, the company discounted the note at the bank. The bank's discount rate was 9%.
- How much were the proceeds?
- How much was the loss on discounting?
Q3. On October 1, 2021, Claude Co. discounted a P600,000, one-year, 12% note, received from a customer on January 1, 2021, with a bank at 14% on a without recourse basis.
- How much is the proceeds?
- How much is the loss on discounting?
Q4. On July 1, 2021, Karrie Co. discounted an P800,000, 90 day, 12% note received from a customer on June 1, 2021, with a bank at 15% on with recourse basis. The discounting is treated as conditional sale. On August 30, 2021, at maturity date, the maker of the note defaulted and the bank charged Karrie Co. the maturity value of the note plus a P3,000 protest fee. -How much is transferred to accounts receivable due to the dishonor?
- How much is the proceeds from the discounting?
- How much liability is recognized as a result of the discounting?
Q5. On July 1, 2021, Roger Co. discounted its own note of P200,000 to a bank at 10% for one year. How much was the net proceeds received by Roger from the transaction? 14. On December 31, 2020, Chou Bank has a loan receivable of P2,000,000 from a borrower that it is carrying at face value and is due on December 31, 2025. Interest on the loan is payable at 9% each December 31. The borrower paid the interest due on December 31, 2020 but informed the bank that it would probably miss the next two years' interest payments because of financial difficulty. After that, the borrower is expected to resume the annual interest payment but it would make the principal payment one year late, with interest paid for that additional year at the time of principal payment. The present value of 1 at 9% is as follows:
One period: 0.917
Two periods: 0.842
Three periods: 0.772
Four periods: 0.708
Five periods: 0.650
Six periods: 0.569
- Compute the present value of the loan receivable on December 31, 2020.
- Compute the impairment loss to be recognized on December 31, 2020.
- Compute for the interest income in 2021.