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Notes Receivable Discounting Analysis

The document provides solutions to three requirements involving notes receivable. It calculates interest and discounts on notes receivable over different time periods and records the resulting journal entries.

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Gwyneth Bajade
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9 views1 page

Notes Receivable Discounting Analysis

The document provides solutions to three requirements involving notes receivable. It calculates interest and discounts on notes receivable over different time periods and records the resulting journal entries.

Uploaded by

Gwyneth Bajade
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Problem 4

Requirement 1 Solutions:
Face value of notes receivable ₱ 2,000,000
Add: Total interest (₱ 2,000,000 x 10% x 12/12) ₱ 200,000
Maturity value of notes receivable ₱ 2,200,000
Less: Discount (₱ 2,000,000 x 12% x 7/12) ₱ (154,000)
Net proceeds of notes receivable ₱ 2,046,000

Requirement 2 Solutions:
Face value of notes receivable ₱ 2,000,000
Add: Accrued interest (₱ 2,000,000 x 10% x 5/12) ₱ 83,333
Carrying amount of notes receivable ₱ 2,083,333
Net cash proceeds ₱ 2,046,000
Loss on discounting of notes receivable ₱ (37,333)

Requirement 3 Solutions:
Cash ₱ 2,046,000
Loss on discounting of notes receivable ₱ 37,333
Notes receivable ₱ 2,000,000
Interest income ₱ 83,333
To record the the discounting notes receivable with
ELEVENTH Bank on a without recourse basis.

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