Reference no: EM132916374
Problem 1 - Control was surrendered by Zeus Company. Zeus Company factored P6,000,000 of accounts receivable to a finance entity at the end of current year.
The factor assessed a fee of 3% and retained a holdback equal to 5% of the accounts receivable.
In addition, the factor charged 15% interest computed on a weighted average time to maturity of the accounts receivable of 54 days.
If all accounts are collected, what is the cost of factoring the accounts receivable?
a. 313,150
b. 180,000
c. 433,150
d. 613,150
Problem 2 - On August 1, 2019, Vann Company's P5,000,000 one-year, non-interest-bearing note due July 31, 2020 was discounted at Homestead Bank at 10.8%. The entity used the straight line method of amortizing discount.
What amount was received from the discounting on August 1, 2019?
a. 5,000,000
b. 4,460,000
c. 4,730,000
d. 4,775,000
Problem 3 - On January 1, 2019, Ott Company sold goods to Fox Comapany.
Fox signed a noninterest-bearing note requiring payment of P600,000 annually for seven years.
The first payment was made on January 1, 2019.
The prevailing rate of interest for this type of note at date of issuance was 10%.
PV of an ordinary annuity of 1 at 10% for 6 periods 4.36
PV of an ordinary annuity of 1 at 10% for 7 periods 4.87
What is the carrying amount of the note receivable on January 1, 2019?
a. 3,600,000
b. 2,616,000
c. 3,000,000
d. 2,322,000
Problem 4 - On December 31, 2019, Park Company sold used equipment with carrying amount of P2,000,000 in exchange for a noninterest bearing note of P5,000,000 requiring ten annual payments of P500,000.
The first payment was was made on December 31, 2020.
The market interest for similar note was 12%. The present value of an ordinary annuity of 1 at 12% is 5.65 for ten periods and 5.33 for nine periods.
What is the gain on sale of equipment to be recognized in 2019?
a. 3,000,000
b. 2,175,000
c. 825,000
d. 0
Problem 5 - Philippine Bank granted a loan to a borrower on January 1, 2019. The interest on the loan is 8% payable annually starting December 31, 2019. The loan matures in three years on December 31, 2021.
Principal amount 3,000,000
Origination fee charged against the borrower 100,000
Direct origination cost incurred 260,300
What is the carrying amount of the loan receivable on January 1, 2019?
a. 3,160,300
b. 3,260,300
c. 2,900,000
d. 3,000,000