SCHOOL OF ACCOUNTANCY, BUSINESS and HOSPITALITY
Accountancy Department
ACCT 1046- Intermediate Accounting 1
Second Semester, SY 2022-2023
EXERCISES
NOTES AND LOANS RECEIVABLE
(Including Impairment of Loans Receivable)
Make sure you have solved the following problems before attending our classes. Please write your
complete solution in your Journal of Learnings (JoL).
Problem 1 - Interest-Bearing Note with Realistic/Reasonable Interest Rate
On January 1, 2023, Florendo Co. sold a machine to Gregorio Co. In lieu of cash payment, Gregorio gave Florendo a 4year, P100,000, 10% note. The note requires interest to be paid annually on December 31.
The machinery has a cost of P500,000 and accumulated depreciation as of January 1, 2023 of P350,000.
The 10% interest rate is a realistic rate of interest for a note of this type.
Required:
A. Prepare all the necessary entries in 2023.
1/1/23
Notes Receivable
Accumulated Depreciation – Machinery
Loss on Sale of Equipment
Machinery
12/31/23 Cash
Interest Income
100,000
350,000
50,000
500,000
10,000
10,000
B. Prepare the entry upon collection of the note.
12/31/26 Cash
Notes Receivable
Interest Income
C.
110,000
100,000
10,000
Compute for the following as of December 31, 2023:
1) Gain or loss on sale of machinery.
Solution:
Machinery
Accumulated Depreciation – Machinery
Carrying Amount of Equipment
500,000
(350,000)
150,000
Present Value of Note
Carrying Amount of Equipment
Loss on Sale of Equipment
100,000
(150,000)
(50,000)
2) Interest income
Solution:
Principal
× Interest Rate
Interest Income
3) Current portion of the Notes Receivable
100,000
10%
10,000
-
None, the principal of the note is not due within twelve months.
4) Noncurrent portion of the Notes Receivable
-
100,000
D. Assuming that the transaction happened on March 1, 2023 and the note requires interest to be paid annually on
February 28, 2023. Prepare the following:
1) Journal Entries in Year 1
03/01/23 Notes Receivable
Accumulated Depreciation – Machinery
Loss on Sale of Equipment
Machinery
100,000
350,000
50,000
500,000
12/31/23 Interest Receivable
Interest Income
8,333
1/1/24
8,333
8,333
Interest Income
Interest Receivable
8,333
02/28/24 Cash
Interest Income
10,000
10,000
2) Compute for the following as of December 31, 2023
●
Interest Income
Principal
× Interest Rate
× No. of months accrued
Interest Income
●
100,000
10%
10
12
8,333
Carrying amount of Notes Receivable
Principal
Add: Accrued Interest receivable
Total:
100,000
8,333
108,333
Problem 2 - Interest-Bearing Note with Unrealistic Interest Rate One-Time Collection of Principal
On January 1, 2023, Gregorio Co. sold a machine to Florendo Co. In lieu of cash payment, Florendo gave Gregorio a 4year, P100,000, 10% note. The note requires interest to be paid annually on December 31. The machinery has a cost of
P500,000 and accumulated depreciation as of January 1, 2023 of P350,000.
The prevailing rate of interest for a note of this type is 16%.
Required:
A. Prepare all the necessary entries in 2023.
1/1/23
12/31/23
Notes Receivable
100,000
Accumulated Depreciation – Machinery 350,000
Loss on Sale of Machinery
66,788
Machinery
Discount on Notes Receivable
Cash
Discount on Notes Receivable
500,000
16,788
10,000
3,314
(See amortization table)
Interest Income
13,314
B. Prepare the entry upon the collection of the note on December 31, 2026.
12/31/26
C.
Cash
Discount on Notes Receivable
Notes Receivable
Interest Income
Compute for the following as of December 31, 2023:
110,000
5,171
100,000
15,171
1) Gain or loss on sale of machinery.
1−(1.16)−4
PV of P1= (1.16)-4 = 0.5523
PV of Lumpsum = 100,000 × 0.5523 = 55,230
PV of Lumpsum
PV of Interest
Present Value of Note, 1/1/23
PV of OA = 0.16 =2.7982
PV of Interests = 10,000 × 2.7982 = 27,982
55,230
27,982
83,212
Present Value of Note, 1/1/23
* Carrying Amount of Equipment
Loss on Sale of Machinery
*
Machinery
500,000
Accumulated Depreciation – Machinery (350,000)
Carrying Amount of Equipment
150,000
83,212
(150,000)
(66,788)
2) Interest Income
Face Value
Present Value of Note, 1/1/23
Implicit Interest/Discount on Notes Receivable
100,000
(83,212)
16,788
Table of Amortization
Year
Interest Interest Received
Interest Income
Date
(PV of Note × 16%)
0
1/1/23
1
12/31/23
10,000
13,314
2
12/31/24
10,000
13,844
3
12/31/25
10,000
14,459
4
12/31/26
10,000
15,171
Total
40,000
56,788
Amortization of Discount
(Int. Inc – Int. Rec)
3,314
3,844
4,459
5,171
16,788
Present Value
(PV + Amort. of Disc.)
83,212
86,526
90,370
94,829
100,000
Interest Income for the year 2023 – 13,314
3) Current portion of the Notes Receivable
-
0
4) Noncurrent portion of the Notes Receivable
-
86,526
D. Assuming that the transaction happened on March 1, 2023 and the note requires interest to be paid annually on
March 1, 2023. Prepare the following:
1) Journal Entries
3/1/23
12/31/23 Interest Receivable
Discount on Notes Receivable
Interest Income
8,333
2,762
1/1//24
Interest Income
Interest Receivable
Discount on Notes Receivable
11,095
Cash
Discount on Notes Receivable
Interest Income
10,000
3,314
3/01/24
2)
Notes Receivable
100,000
Accumulated Depreciation – Machinery 350,000
Loss on Sale of Machinery
66,788
Machinery
Discount on Notes Receivable
500,000
16,788
11,095
8,333
2,762
13,314
Compute for the following as of December 31, 2023: (Prorate based on the amortization table)
● Interest Income
10
Interest (100,000 × 10% × 12)
Discount on Notes Receivable (3,314 ×
Interest Income
8,333
10
)
12
2,762
11,095
●
Carrying Amount of Notes Receivable
Present Value of Note, 3/1/2023
Discount on Notes Receivable (3,314 ×
Interest Receivable
Carrying Amount, 12/31/23
●
83,212
2,762
8,333
94,307
10
)
12
Current Portion of Notes Receivable
Interest Receivable – 8,333
●
Non-current Portion of Notes Receivable
Present Value
Amortization of Discount (3,314 ×
Non-current portion of N/R
83,212
2,762
85,974
10
)
12
Problem 3 - Interest-Bearing Note with Unrealistic Interest Rate, Interest Is Payable Semi-Annually, OneTime
Collection of Principal
On January 1, 2023, Teofilo Co. sold a machine to Candido Co. In lieu of cash payment, Candido gave Teofilo a 4-year,
P100,000, 10% note. The note requires interest to be paid semi-annually every June 30 and December 31. The
machinery has a cost of P500,000 and accumulated depreciation as of January 1, 2023 of P350,000.
The prevailing rate of interest for a note of this type is 16%.
Required:
A. Prepare all the necessary entries in 2023.
1/1/23
6/30/23
Notes Receivable
100,000
Accumulated Depreciation – Machinery 350,000
Loss on Sale of Equipment
67,237
Machinery
Discount on Notes Receivable
Cash
5,000
Interest Income
12/31/23
500,000
17,237
5,000
Cash
5,000
Interest Income
5,000
B. Prepare the entry upon the collection of the note.
12/31/26
Cash
Discount on Note Receivable
Notes Receivable
Interest Income
105,000
2,773
100,000
7,773
C. Compute for the following as of December 31, 2023:
1) Gain or loss on sale of machinery.
PV of P1 = (1.08)-8 = 0.5403
PV of Lumpsum = 100,000 × 0.5403 = 54,030
PV of Lumpsum
PV of Interest
Present Value of Note
54,030
28,733
82,763
1− (1.08)−8
PV of OA =
= 5.7466
0.08
PV of Interests = 100,000 × 5% × 5.7466 = 28,733
Present Value of Note, 1/1/23
Carrying Amount of Equipment
Loss on Sale of Machinery
Machinery
500,000
Accumulated Depreciation – Machinery (350,000)
Carrying Amount of Equipment
150,000
82,763
(150,000)
67,237
2) Interest income
Face Value
Present Value of Note, 1/1/23
Implicit Interest/Discount on Notes Receivable
Table of Amortization
100,000
(82,763)
17,237
Interest Interest Received
Date
1/1/23
6/30/23
5,000
12/31/23
5,000
6/30/24
5,000
12/31/24
5,000
6/30/25
5,000
12/31/25
5,000
6/30/26
5,000
12/31/26
5,000
Interest Received
Amortization of Discount
Interest Income
Interest Income
(PV of Note × 8%)
Amortization of Discount
(Int. Inc – Int. Rec)
6,621
6,751
6,891
7,042
7,205
7,382
7,572
7,773
1,621
1,751
1,891
2,042
2,205
2,382
2,572
2,773
Present Value
(PV + Amort. of Disc.)
82,763
84,384
86,135
88,026
90,068
92,273
94,655
97,227
100,000
10,000
3,372
3,372
3) Current portion of the Notes Receivable
-
0
4) Noncurrent portion of the Notes Receivable
-
86,153
D. Assuming that the transaction happened on March 1, 2023 and the note requires interest to be paid semi-annually
every August 31 and February 28. Prepare the following:
1) Journal Entries in Year 1
3/1/23
8/31/23
12/31/23
1/1/24
2/28/24
Notes Receivable
Accumulated Depreciation – Machinery
Loss on Sale of Equipment
Machinery
Discount on Notes Receivable
100,000
350,000
67,237
Cash
Discount on Notes Receivable
Interest Income
5,000
1,621
Interest Receivable
Discount on Notes Receivable
Interest Income
3,334
1,167
500,000
17,237
6,621
4,501
Interest Income
4,501
Interest Receivable
Discount on Notes Receivable
3,334
1,167
Cash
Discount on Notes Receivable
Interest Income
6,751
5,000
1,751
2) Journal entry upon collection of the note
2/28/27
Cash
Discount on Notes Receivable
Notes Receivable
Interest Income
105,000
2,773
100,000
7,773
Note: This entry only works if you made a reversing entry on January 1, 2027.
3) Compute for the following:
●
Interest Income for the year ending 2023
Interest Income (3/1/23 – 8/31/23)
Interest Income (9/1/23 – 12/31/23)
Interest Income, 2023
●
Interest Income for the year ending 2024
6,621
4
4,501 - (6,751 × 6)
11,112
Interest Income (1/1/24 – 2/28/24)
Interest Income (3/1/24 – 8/31/24)
Interest Income (9/1/24 – 12/31/24)
Interest Income, 2024
●
Interest Income for the year ending 2025
Interest Income (1/1/25 – 2/28/25)
Interest Income (3/1/25 – 8/31/25)
Interest Income (9/1/25 – 12/31/25)
Interest Income, 2025
●
2
2,461 - (7,382 × 6)
7,572
4
5,182 - (7,773 × 6)
15,215
Interest Income for the year ending 2027
Interest Income (1/1/27 – 2/28/27)
●
2
2,347 - (7,042 × 6)
7,205
4
4,921 - (7,382 × 6)
14,482
Interest Income for the year ending 2026
Interest Income (1/1/26 – 2/29/26)
Interest Income (3/1/26 – 8/31/26)
Interest Income (9/1/26 – 12/31/26)
Interest Income, 2026
●
2
2,250 - (6,751 × 6)
6,891
4
4,695 - (7,042 × 6)
13,836
2
2,591 - (7,773 × 6)
Carrying Amount of the Note as of 12/31/23
PV Note, 8/31/23
4
Accrued Interest Income (6,751 × 6)
Carrying Amount of N/R, 12/31/23
●
●
84,384
4,501
88,885
Current Portion, 12/31/2023:
Accrued Nominal Interest Receivable
3,333 - (5000 × 6)
Non-current Portion, 12/31/2023:
(P88,885 – 3,333)
85,552
4
Problem 4 - Interest-bearing Note with Unrealistic Interest Rate, Uniform Collection of Principal
On January 1, 2023, Candido Co. sold a machine to Teofilo Co. In lieu of cash payment, Teofilo gave Candido a 4-year,
P100,000, 10% note. The note requires interest to be paid annually on December 31. The machinery has a cost of
P500,000 and accumulated depreciation as of January 1, 2023 of P350,000.
The prevailing rate of interest for a note of this type is 16% and the principal amount of the note is to be paid in four equal
annual installments of P25,000 every December 31.
Required:
A. Prepare all the necessary entries in 2023.
1/1/23
Notes Receivable
Accumulated Depreciation
Loss on Sale of Equipment
Machinery
Discount on Notes Receivable
12/31/23 Cash
Discount on Notes Receivable
Notes Receivable
Interest Income
100,000
350,000
61,265
500,000
11,265
35,000
4,198
25,000
14,198
B. Compute for the following as of December 31, 2023:
1) Gain or loss on sale of machinery.
1−(1.16)−4
PV of OA =
= 2.7982
0.16
PV of Principal = 25,000 × 2.7982 = 69,955
PV of Interest
100,000 × 10% × (1.16)−1 = 8,621
75,000 × 10% × (1.16)−2 = 5,574
50,000 × 10% × (1.16)−3 = 3,204
25,000 × 10% × (1.16)−4 = 1,381
PV of Note = 88,735
Equipment
Accumulated Depreciation
Carrying Amount of Equipment
500,000
(350,000)
150,000
PV of Note
Carrying Amount of Equipment
88,735
(150,000)
Loss on Sale of Equipment
(61,265)
2) Interest income
Face Value
PV of Note
Implicit Interest
100,000
88,735
11,265
Table of Amortization:
Interest
Interest
Date
Received
1/1/23
12/31/23
10,000
12/31/24
7,500
12/31/25
5,000
12/31/26
2,500
Interest
Income
14,198
10,869
7,408
3,790
Discount on
Amortization
Collection on
Face Value
4,198
3,369
2,408
1,290
25,000
25,000
25,000
25,000
Principal
Amortization
20,802
21,631
22,592
23,710
PV
88,735
67,933
46,302
23,710
Interest Income - 88,735 × 16% = 14,198
3) Current portion of the Notes Receivable, 12/31/23:
Amount to be collected
Unearned Implicit Interest
Current Portion of Notes Receivable
25,000
(3,369)
21,631
4) Noncurrent portion of the Notes Receivable, 12/31/23:
PV of Note, 12/31/23
Current Portion of Notes Receivable
Noncurrent Portion of Notes Receivable
67,933
(21,631)
46,302
C. Assuming the transaction happened on March 1, 2023 and the note requires the interest to be paid annually on March
1. The principal amount of the note is to be paid in four equal annual installments of P25,000 every March 1. Prepare
the following:
1) Journal Entries in Year 1
3/1/23
Notes Receivable
100,000
Accumulated Depreciation
350,000
Loss on Sale of Equipment
61,265
Machinery
Discount on Notes Receivable
12/31/23
1/1/24
3/1/24
Interest Receivable
Discount on Notes Receivable
Interest Income
8,333
3,498
Interest Income
Interest Receivable
Discount on Notes Receivable
(Reversing Entry)
11,831
500,000
11,265
11,831
Cash
Discount on Notes Receivable
Notes Receivable
Interest Income
8,333
3,498
35,000
4,198
25,000
14,198
2) Compute for the following:
●
Carrying Amount of the Note as of 12/31/23
PV Note, 3/1/23
10
Accrued Nominal Interest (10,000 × 12 )
or
10
Amortized Discount (4,198 × )
12
Carrying Amount of Note, 12/31/23
●
Current Portion, 12/31/23:
88,735
8,333
3,498
100,566
PV Note, 3/1/23
Accrued Interest Income (14,198 × )
Carrying Amount of Note, 12/31/23
88,735
11,832
100,567
10
Accrued Interest Income (14,198 × 12 )
11,832
●
Non-current Portion:
(100,566 – 11,832) = 88,734
●
Interest Income (Prorate based on the amortization table)
a. For the year ending 2023
Interest Income (3/1/23 – 12/31/23)
10
11,832 – 14,198 × 12
b. For the year ending 2024
c.
2
Interest Income (1/1/24 – 2/29/24)
2,366 – 14,198 × 12
Interest Income (3/1/24 – 12/31/28)
Interest Income, 2024
9,058 – 10,869 × 12
11,424
10
For the year ending 2025
2
Interest Income (1/1/25 – 2/28/25)
1,812 – 10,869 × 12
Interest Income (3/1/25 – 12/31/25)
Interest Income, 2025
6,173 – 7,408 ×
12
7,985
10
d. For the year ending 2026
2
Interest Income (1/1/26 – 2/28/26)
1,235 – 7,408 × 12
Interest Income (3/1/26 – 12/31/26)
Interest Income, 2026
3,158 – 3,790 × 12
4,393
10
e. For the year ending 2027
Interest Income (1/1/27 – 2/28/27)
10
632 – 3,790 × 12
D. Assuming that the first installment of the principal is paid on the day of the transaction and the remaining installments
is paid annually every January 1. Prepare the following: (ANNUITY DUE Scenario)
1) Journal Entries in 2023
1/1/23
Notes Receivable
Accumulated Depreciation
Loss on Sale of Machinery
Machinery
Discount on Notes Receivable
Cash
100,000
350,000
57,068
500,000
7,068
25,000
Notes Receivable
1/1/24
Cash
Discount on Notes Receivable
Notes Receivable
Interest Income
25,000
32,500
3,257
25,000
10,757
2) Gain or loss on sale of Machinery
1−(1.16)4−1
PV of AD of P1 =
+1
0.16
PV of AD of P1 = 3.2459
PV of Principal = 25,000 × 3.2459 = 81,148
PV of Note 1/1/23 = 92,932
Face Value
100,000
PV of Note 1/1/23
(92,932)
Implicit Interest
7,068
PV Of Interest
75,000 × 10% × (1.16)−1 = 6,466
50,000 × 10% × (1.16)−2 = 3,716
25,000 × 10% × (1.16)−3 = 1,602
Present Value of Note, 1/1/23
Carrying Amount of Machinery
Loss on Sale of Machinery
92,932
(150,000)
57,068
3) Interest Income
Interest
Date
1/1/23
1/1/23
1/1/24
1/1/25
1/1/26
Interest
Received
Interest
Income
7,500
5,000
2,500
Discount on
Amortization
10,869
7,408
3,791
4) Carrying amount 12/31/2023:
PV, 1/1/23
Principal Amortization,1/1/23
Accrued Interest Income
5) Current portion, 12/31/2023:
Principal collectible on 1/1/24
Accrued Interest Income
Collection on
Principal
25,000
25,000
25,000
25,000
3,369
2,408
1,291
Principal
Amortization
25,000
21,631
22,592
23,709
PV
92,932
67,932
46,301
23,709
-
92,932
(25,000)
10,869
78,801
21,631
10,869
32,500
Problem 5 - Noninterest-bearing Note, One-time Collection of Principal
On January 1, 2023, Rosenio Co. sold a machine to Rose Co. In lieu of cash payment, Rose gave
Rosenio a 5-year, P500,000 note. The machinery has a cost of P500,000 and accumulated depreciation as of January 1,
2023 of P150,000.
The note is a non-interest bearing note and the prevailing rate of interest for a note of this type is 10%.
Required:
A. Prepare all the necessary entries in 2023.
1/1/23
12/31/23
Notes Receivable
Accumulated Depreciation
Loss on Sale of Machinery
Machinery
Discount on Notes Receivable
Discount on Notes Receivable
Interest Income
500,000
150,000
39,550
500,000
189,550
31,045
31,045
B. Compute for the following as of December 31, 2023:
1) Gain or loss on sale of machinery.
PV of P1= (1.10)−5 = 0.6209
PV of Note, 1/1/23 = 0.6209 × 500,000 = 310,450
PV of Note
Carrying Amount of Equipment
Loss on Sale of Machinery
310,450
(350,000)
39,550
2) Interest Income
Amortization Table:
Interest Date
1/1/23
12/31/23
12/31/24
12/31/25
12/31/26
12/31/27
12/31/27
Collection
Effective Interest Income
31,045
34,150
37,565
41,321
45,469
500,000
PV
310,450
341,495
375,645
413,210
454,531
500,000
-
Interest Income, 2023 = 310,450 × 10% = 31,045
C. Assuming the transaction happened on March 1, 2022 and the machinery has accumulated depreciation as of March
1, 2023 of P150,000. Prepare the following:
1) Journal Entries in Year 1
3/1/23
Notes Receivable
500,000
Accumulated Depreciation
150,000
Loss on Sale of Machinery
39,550
Machinery
Discount on Notes Receivable
12/31/23
2/28/24
2)
Discount on Notes Receivable
Interest Income
25,871
Discount on Notes Receivable
Interest Income
5,174
500,000
189,550
25,871
5,174
Interest Income (Prorate based on the amortization table)
●
For the year ending 2023
Interest Income (3/1/23 – 12/31/23)
●
●
●
●
●
10
25,871 – 31,045 × 12
For the year ending 2024
2
Interest Income (1/1/24 – 2/29/24)
5,174 – 31,045 × 12
Interest Income (3/1/24 – 12/31/28)
Interest Income, 2024
28,458 – 34,150 × 12
33,632
10
For the year ending 2025
2
Interest Income (1/1/25 – 2/28/25)
5,692 – 34,150 × 12
Interest Income (3/1/25 – 12/31/25)
Interest Income, 2025
31,304 – 37,565 ×
12
36,996
10
For the year ending 2026
2
Interest Income (1/1/26 – 2/28/26)
6,261 – 37,565 × 12
Interest Income (3/1/26 – 12/31/26)
Interest Income, 2026
34,434 – 41,321 × 12
40,695
10
For the year ending 2027
2
Interest Income (1/1/27 – 2/28/27)
6,887 – 41,321 × 12
Interest Income (3/1/27 – 12/31/27)
Interest Income, 2027
37,891 – 45,469 × 12
44,778
10
For the year ending 2028
Interest Income (1/1/28 – 2/28/28)
2
7578 – 45,469 × 12
3) Carrying amount of the note as of December 31, 2023
PV of Note, 3/1/23
Amortized Discount 12/31/23
Carrying amount of Note 12/31/23
310,450
25,871
346,321
4) Current portion, 12/31/23:
- 0
5) Non-current portion, 12/31/23: (Prorate based on the amortization table)
-
PV Note, 3/1/23
Implicit Interest
310,450
10
25,871 – 31,045 × 12
336,321
Problem 6 - Noninterest-bearing Note, Uniform Collection of Principal
On January 1, 2023, Ronaldo Co. sold a machine to Ron Co. In lieu of payment, Ron gave Ronaldo a 3-year, P600,000
note. The machinery has a cost of P500,000 and accumulated depreciation as of January 1, 2023 of P150,000.
The note is a non-interest bearing note and the prevailing rate of interest for a note of this type is 14% and the principal
amount of the note is to be paid in three equal annual installments of P200,000 every December 31.
Required:
A. Prepare all the necessary entries in 2023.
1/1/23
12/31/23
Notes Receivable
600,000
Accumulated Depreciation
350,000
Machinery
Discount on Notes Receivable
Gain on Sale
Cash
Discount on Notes Receivable
Notes Receivable
Interest Income
500,000
135,680
114,320
200,000
65,005
200,000
65,005
B. Compute for the following as of December 31, 2023:
1) Gain or loss on sale of machinery.
1−(1.14)−3
PV of OA of P1 = 0.14 = 2.3216
PV of Note 1/1//23 = 200,000 × 2.3216 = 464,320
PV of Note 1/1/23
Carrying Amount of Note
Gain on Sale of Machinery
464,320
(350,000)
114,320
2) Interest Income
Amortization Table:
Interest Date
1/1/23
12/31/23
12/31/24
12/31/25
Collection
Effective Interest Income Principal Amortization
200,000
200,000
200,000
65,005
46,106
24,569
134,995
153,894
175,431
PV
464,320
329,325
175,431
3) Current portion of the Notes Receivable
Amount to be collected on 2024
Unearned Implicit Interest
Current Portion of Note, 12/21/23
200,000
(46,106)
153,894
4) Noncurrent portion of the Notes Receivable
PV of Note, 12/31/23
Current Portion of Note
Noncurrent portion of Note 12/31/23
329,325
(153,894)
175,531
C. Assuming that the sale of the machinery that has accumulated depreciation of 150,000 happened on March 1, 2023,
and the principal amount of the note is to be paid in three equal annual installments of P200,000 every February 28.
Prepare the following:
1) Journal Entries in Year 1
3/1/23
12/31/23
2/28/24
Notes Receivable
600,000
Accumulated Depreciation
350,000
Machinery
Discount on Notes Receivable
Gain on Sale
Discount on Notes Receivable
Interest Income
Cash
Discount on Notes Receivable
Notes Receivable
500,000
135,680
114,320
54,171
54,171
200,000
10,834
200,000
Interest Income
54,171
2) Interest Income (Prorate based on the amortization table)
●
For the year ending 2023
Interest Income (3/1/23 – 12/31/23)
●
●
●
10
54,171 – 65,005 × 12
For the year ending 2024
2
Interest Income (1/1/24 – 2/29/24)
10,834 – 65,005 × 12
Interest Income (3/1/24 – 12/31/28)
Interest Income, 2024
38,422 – 46,106 × 12
49,256
10
For the year ending 2025
2
Interest Income (1/1/25 – 2/28/25)
7,684 – 46,106 × 12
Interest Income (3/1/25 – 12/31/25)
Interest Income, 2025
20,474 – 24,569 × 12
28,158
10
For the year ending 2026
Interest Income (1/1/26 – 2/28/26)
2
4,095 – 24,569 × 12
3) Carrying Amount as of 12/31/23
PV Note, 1/1/23
Amortized Discount
Carrying Amount of NR, 12/31/23
464,320
54,171
518,491
4) Current portion, 12/31/23:
Amount to be collected in 2024
Unearned Implicit Interest
Current Portion
5) Non-current portion, 12/31/23:
‘
Carrying Amount of NR, 12/31/23
Current portion of NR, 12/31/23
Noncurrent portion of NR, 12/31/23
200,000
2
(10,834) – 65,005 × 12
189,166
518,491
(189,166)
329,325