The following Receivables as of December 31, 2021 were taken from the books of Gandia Company.
Trade Installment receivable due in 18 Months, including unearned interest of P15,000.
Receivables from officers
Claims against shipping company, due in 15 months
Past due trade accounts receivables
Customer's NSF check returned by bank
Advances to employees
Receivable from customer arising from sale of goods
Interest receivable on bonds
Interest receivable on notes
Other trade accounts receivable - Unassigned
Subscription receivable for Ordinary shares due in 24 months
Trade Accounts receivable - Assigned
Trade Accounts on which post dated check is held
Deposit made by customer for warehouse rent for 2 years
Trade acounts known to be worthless
725,000.00
200,000.00
120,000.00
600,000.00
80,000.00
25,000.00
750,000.00
150,000.00
45,000.00
240,000.00
1,000,000.00
550,000.00
290,000.00
140,000.00
30,000.00
Non trade
Non trade
Non trade
Non trade
Non trade
Non trade
Liablity
Liablity
How Much is trade receivables to be reported on the December 31, 2021 financial statements?
Trade Installment receivable due in 18 Months, including unearned interest of P15,000.
Past due trade accounts receivables
Customer's NSF check returned by bank
Receivable from customer arising from sale of goods
Other trade accounts receivable - Unassigned
Trade Accounts receivable - Assigned
Trade Accounts on which post dated check is held
710,000.00 Unearned interest excluded
600,000.00
80,000.00
750,000.00
240,000.00
550,000.00
290,000.00
3,220,000.00
Assume that Gandia's policy estimates that 5% of the outstanding balance of trade receivable is
Uncollectible, a beginning in allowance for bad debts of P56,500 and a total provision of P102,000. How
Much is bad debts expense for 2021?
ADA
30,000.00
Allowance for bad debts for the year
Outstanding P3,220,000 * 5% ECL
Net Realizable Value of Receivables
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56,500.00
134,500.00
161,000.00
3,059,000.00
On january 1, 2021, Boss Company's accounts receivable has an outstanding balance of P500,000. Below
are the transactions during 2021:
Total sales including cash sales of P500,000
Accounts Receivable written off
Total Sales return, of which P30,000 pertains to sales made on a cash basis.
Amount received from credit customers
Sales discount and allowances granted.
Amounts received representing recovery, not included in the P5,100,000 above
8,000,000.00
60,000.00
80,000.00
5,100,000.00
70,000.00
120,000.00
What is the amortized cost of the accounts receivable on December 31, 2021, assuming that the
Company's policy is to provide 5% allowance based on the outstanding balance?
2,584,000.00
A
C
E
A/R
500,000.00
7,500,000.00
120,000.00
60,000.00
50,000.00
5,170,000.00
120,000.00
B
D
F
G
2,720,000.00
I
Allowance for bad debts for the year
Outstanding P3,220,000 * 5% ECL
*A Beginning AR
*B AR written off
*C Sales excluding Cash Sales
*D Sales return for credit sales
*E amount received not included in amount received in credit customers
*F Amount received recovery from credit customers + SR&A
*G Amount received recovery from credit customers
*H beginning balance AR * 5% P500,000 * .05 = 25,000
*I AR written off
*J Amount received recovery from credit customers (ADA)
*I Bad debts expense for the year
*K Outstanding balance A/R * 5%
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ADA
60,000.00
25,000.00 H
120,000.00 J
51,000.00 I
136,000.00 K
Leon Company has an accounts receivable balance of P500,000 and Allowance for Bad dbts of P48,000
as of December 31, 2020. Below are transacions recorded by the company in 2021:
Credit sales during the year
Total Accounts collected from customers during the year
Accounts written off as uncollectible
Recoveries from accounts written of in the prvious year
3,120,000.00
3,020,160.00
42,000.00
2,160.00
An aging of accounts receivable on December 31, 2021 is shown below:
Age group
Less than 60 Days
Between 61 and 120 Days
Between 121 and 180 Days
Over 180 Days
% A/R TOTAL
Probability of Collection
99%
88%
45%
20%
60%
22%
15%
3%
The adjusted balance of gross accounts receivable is?
The balance of allowance for bad debts as of December 31, 2021 is?
Bad debts expense for the year 2021 is?
560,000.00
77,784.00
69,624.00
A/R
500,000.00
3,120,000.00
2,160.00
3,020,160.00
42,000.00
560,000.00
ADA
42,000.00
Allowance for bad debts for the year
Required allowance as per aging
An aging of accounts receivable on December 31, 2021 is shown below:
Age group
Less than 60 Days
Between 61 and 120 Days
Between 121 and 180 Days
Over 180 Days
Total
48,000.00
2,160.00
69,624.00
77,784.00
% A/R TOTAL
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336,000.00
123,200.00
84,000.00
16,800.00
560,000.00
Probability of UnCollection
1%
12%
55%
80%
Uncollectible
3,360.00
14,784.00
46,200.00
13,440.00
77,784.00
Cash
Credit
Cost of Sales
Cash Received from customers
500,000.00
650,000.00
Total
4,500,000.00
5,850,000.00
5,000,000.00
6,500,000.00
Inventories were marked to sell as follows: Cash Sales, 30% above cost and credit sales at 40% above cost all of which are deemed collectible.
The Balance of accounts receivable at the end of the year was?
450,000.00
At Cost
100%
Cost of Sales
Selling price is 40% above cost
Cash Received from customers
4,500,000.00
A/R
6,300,000.00
5,850,000.00
450,000.00
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Mark up
Selling price
40%
1,800,000.00
140%
6,300,000.00
On january 1, 2021, EX Company sold its equipment with an original cost of P1,000,000 and an accumulated depreciation of P400,000 and received a cash of P200,000
and a 4 year, 3%, P500,000 note to be collected on December 31, 2024. Interest is to be collected at the end of each year. Effective interest on the note on this date is 5%.
How much is the gain or (loss) on sale of the equipment?
How much is the interest income for the period ended December 31, 2022?
64,540.49
23,638.38
Cost of Equipment
Accumulated Depreciation
Carrying Value of Equipment
1,000,000.00
400,000.00
600,000.00
Principal
Interest
Term
Nominal Rate
Effective Rate
Down Payment
PV of 1 Factor
500,000.00
15,000.00
4.00
3%
5%
200,000.00
105%
0.82
PV of OA
105%
3.545950504
PV of 1
PV of OA
Present Value of Future Cash Flows
Down Payment
FMV of Consideration Given UP
less CV of Equipment
Gain on Sale of Equipment
411351.2374
53,189.26
464,540.49
200,000.00
664,540.49
600,000.00
64,540.49
Year
Nominal rate
Effective Rate
3%
Jan-21
Dec-21
Dec-22
Dec-23
Dec-24
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15,000.00
15,000.00
15,000.00
15,000.00
Balance
5%
23,227.02
23,638.38
24,070.29
24,523.81
464,540.49
472,767.52
481,405.90
490,476.19
500,000.00
Wise Inc sold its building on August 1, 2020. The buidling has an estimated useful life of 5 years with an original cost of P15,000,000 and a carrying Value of P9,500,000
at the date of sale. Wise received a P6,000,000, 3 year non interest bearing note to be collected in equal annual installment of P2,000,000 every July 31 of each year starting 2021
There is no available fair value for the building but on August 1, 2020, effective interest for similar note was at 6%. On December 31, 2021, the effective interest increased to 7%.
How much is the interest income for the perdiod ended December 31, 2021?
How much is the current portion of the Note receivable as of December 31, 2021?
278,780.47
1,824,492.70
Cost of Equipment
Accumulated Depreciation
Carrying Value of Equipment
15,000,000.00
5,500,000.00
9,500,000.00
Serial Payment
Interest
Term
Nominal Rate
Effective Rate
Down Payment
PV of 1 Factor
2,000,000.00
3.00
0%
6%
-
PV of OA
106%
2.673011949
PV of 1
PV of OA
Present Value of Future Cash Flows
Down Payment
FMV of Consideration Given UP
less CV of Equipment
Loss on Sale of Equipment -
Year
0
5,346,023.90
5,346,023.90
5,346,023.90
9,500,000.00
4,153,976.10
Serial Payment
Effective Rate
Allocated
Balance
Interest income
Current Portion
6%
August 1 2020
December 31 2020
August 1 2021
December 31 2021
August 1 2022
December 31 2022
August 1 2023
Year
2,000,000.00
2,000,000.00
220,007.12
2,000,000.00
113,207.55
Serial Payment
133,650.60
187,110.84
91,669.63
128,337.49
47,169.81
75,471.70
320,761.43
Effective Rate
Allocated
5,346,023.90
5,479,674.50
3,666,785.33
3,758,454.97
1,886,792.45
1,933,962.26
9,433.96
Balance
1,721,219.53
278,780.47
1,824,492.70
175,507.30
75,471.70
1,924,528.30
Interest income
Current Portion
6%
August 1 2020
December 31 2020
August 1 2021
December 31 2021
August 1 2022
December 31 2022
August 1 2023
2,000,000.00
2,000,000.00
2,000,000.00
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133,650.60
219,186.98
92,471.54
151,653.32
48,574.66
79,662.44
133,650.60
219,186.98
92,471.54
151,653.32
48,574.66
79,662.44
5,346,023.90
5,479,674.50
3,698,861.48
3,791,333.01
1,942,986.33
1,991,560.99
71,223.43
1,688,341.48
311,658.52
1,799,772.02
200,227.98
79,662.44
1,920,337.56
On january 1, 2021, Arc Company received a 10%, P14,000,000 note, collectible in installment plus interest every December 31, each year until December 31, 2025. The note is to be collected as follows
The effective interest rate on Jan 1, 2021 and December 31, 2021 were 14% and 15% respectively
December 31 2021
4,000,000.00
December 31 2022
3,500,000.00
December 31 2023
3,000,000.00
December 31 2024
2,500,000.00
December 31 2025
1,000,000.00
Total
14,000,000.00
How much is the present value of the note at Jan 1, 2021?
How much is the carrying value of the note at December 31, 2021?
How much of the carrying value of the note receivable is reported as Non- Current as of December 31, 2022?
12,921,826.34
9,330,882.03
3,346,414.28
1
14%
PV Factor at 14%
December 31 2021
December 31 2022
December 31 2023
December 31 2024
December 31 2025
Total
Year
4,000,000.00
3,500,000.00
3,000,000.00
2,500,000.00
1,000,000.00
14,000,000.00
Interest
Collections
0.877192982
0.769467528
0.674971516
0.592080277
0.519368664
1,400,000.00
1,000,000.00
650,000.00
350,000.00
100,000.00
3,500,000.00
Effective Rate
10%
Jan-21
Dec-21
Dec-22
Dec-23
Dec-24
Dec-25
10%
Interest
1,400,000.00
1,000,000.00
650,000.00
350,000.00
100,000.00
Current Portion
Non-Current Portion
PV of PCF
10,000,000.00
6,500,000.00
3,500,000.00
1,000,000.00
-
4,736,842.11
3,462,603.88
2,463,646.03
1,687,428.79
571,305.53
12,921,826.34
Balance
14%
1,809,055.69
1,306,323.48
859,208.77
468,498.00
135,087.72
5,400,000.00
4,500,000.00
3,650,000.00
2,850,000.00
1,100,000.00
On October 31, 2021, Ingrid Corp. had the following transactions.
Obtain a P500,000, 6 month loan from Citi Bank, discounted at 12%. The company pledge P600,000 of its accounts receivable as a security for the loan.
Factored P1,000,000 of accounts receivable without recourse on a notification basis with Nice Finance Company. Nice Finance charged a factoring fee of 5% of the amount
of the receivable factored and withheld 10% of the receivable factored
What is the amount of cash received from the financing of the receivables and what amount of loss recognized respectively?
Cash Received
Loss
1,320,000.00
50,000.00
Cash
Interest expense
Loans Payable
470,000.00
30,000.00
Cash
Factors Holdback
Loss on Factoring
Loans Payable
850,000.00
100,000.00
50,000.00
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Balance
5,400,000.00
4,500,000.00
3,650,000.00
2,850,000.00
1,100,000.00
500,000.00
1,000,000.00
9,330,882.03
6,137,205.51
3,346,414.28
964,912.28
-
12,921,826.34
13,330,882.03
13,637,205.51
13,846,414.28
13,964,912.28
14,000,000.00
14,730,882.03
10,637,205.51
6,996,414.28
3,814,912.28
1,100,000.00
On April 1, 2021, Lunar Company loaned P20,000,000 to Eclipse Company. The Loan is to be repayable after 5 years. Interest on this loan is 3% annually every april 1 of each year starting 2022. Direct origination cost
of P478,991 was paid by Lunar and direct origination fee was deducted from the proceeds received by Eclipse Company. The effective interest on this loan is 5% after the origination cost and fees.
How much is the direct origination fee?
How much interest income is recognized on its 2022 income statement?
What was the carrying value of the loan on December 31, 2022?
2,210,781.67
925,163.36
18,828,430.54
Face Value
Direct origination cost
(Direct origination fee)
Net Cash/Consideration given up
Principal
Interest
Term
Nominal Rate
Effective Rate
Down Payment
PV of 1 Factor
20,000,000.00
478,991.00
2,210,781.67
18,268,209.33
20,000,000.00
600,000.00
5.00
3%
5%
105%
0.78
PV of OA
105%
4.329476671
PV of 1
PV of OA
Present Value of Future Cash Flows
Down Payment
FMV of Consideration Given UP
15670523.33
2,597,686.00
18,268,209.33
18,268,209.33
Year
Interest Payment Payment
Effective Rate
Allocated
Balance
Interest income
Current Portion
5%
April 1, 2021
December 31 2021
April 1, 2022
December 31 2022
April 1, 2023
December 31 2023
April 1, 2024
December 31 2024
April 1, 2025
December 31 2024
April 1, 2026
600,000.00
450,000.00
150,000.00
450,000.00
150,000.00
450,000.00
150,000.00
450,000.00
150,000.00
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913,410.47
929,080.99
945,535.04
962,811.79
980,952.38
685,057.85
228,352.62
696,810.74
232,270.25
709,151.28
236,383.76
722,108.84
240,702.95
735,714.29
245,238.10
18,268,209.33
18,953,267.18
18,581,619.80
18,828,430.54
18,910,700.79
19,169,852.07
19,256,235.83
19,528,344.67
19,619,047.62
19,904,761.90
20,000,000.00
313,410.47
925,163.36
779,080.99
941,421.53
795,535.04
958,492.60
812,811.79
976,417.23
830,952.38
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