Scribd
Upload
9 views12 pages

Notes Receivable and Equipment Sales Analysis

The document discusses the sale of equipment by X Company to Y Company. Key details include: - Equipment was sold for $800,000 with accumulated depreciation of $450,000, for a carrying value of $350,000. - Consideration received included $100,000 cash and a 3-year, 15% interest-bearing note for $400,000. - The note will be collected in annual payments of $60,000 in interest plus amortization of the principal. So in summary, the document outlines the sale of equipment and receipt of a multi-year note as part of the consideration from the buyer, Y Company.

Uploaded by

Simon D. San Gabriel
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
9 views12 pages

Notes Receivable and Equipment Sales Analysis

The document discusses the sale of equipment by X Company to Y Company. Key details include: - Equipment was sold for $800,000 with accumulated depreciation of $450,000, for a carrying value of $350,000. - Consideration received included $100,000 cash and a 3-year, 15% interest-bearing note for $400,000. - The note will be collected in annual payments of $60,000 in interest plus amortization of the principal. So in summary, the document outlines the sale of equipment and receipt of a multi-year note as part of the consideration from the buyer, Y Company.

Uploaded by

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

X Company

X Company

Y Company

Z Company

Y Company

Y Company

Z Company
2022
Aug. 5 Notes Receivable ₱ 12,000.00
Sales ₱ 12,000.00

Oct. 4 Cash ₱ 12,180.00


Notes Receivable ₱ 12,000.00
Interest Income ₱ 180.00
I = 12000 × 9% × 60/360
₱ 12,180.00 ₱ 12,180.00

Oct. 10 Notes Receivable ₱ 16,000.00


Accounts Receivable ₱ 16,000.00

Nov. 6 Notes Receivable ₱ 24,000.00


Accounts Receivable ₱ 24,000.00

Nov. 9 Accounts Receivable ₱ 16,160.00


Notes Receivable ₱ 16,000.00
Interest Income ₱ 160.00
I = 16000 × 12% × 30/360
₱ 16,160.00 ₱ 16,160.00

Nov. 30 Cash ₱ 16,273.12


Accounts Receivable ₱ 16,160.00
Interest Income ₱ 113.12
I = 16160 × 12% × 21/360
₱ 16,273.12 ₱ 16,273.12

Dec. 31 Interest Receivable ₱ 440.00


Interest Income ₱ 440.00
I = 24000 × 12% × 55/360
Equipment ₱ 800,000.00
Acummulated Depreciation-Equipment -₱ 450,000.00
Carrying Amount ₱ 350,000.00

Cash ₱ 100,000.00
Notes receivable ₱ 400,000.00 15% interest-bearing note
Total Consideration Received ₱ 500,000.00
Carrying Amount -₱ 350,000.00
Gain on Sale of Equipment ₱ 150,000.00
The entries relative to the note for its entire three-year term are as follows:

2022
Jan. 1 Cash
Notes Receivable
Accumulated Depreciation-Equipment

Dec. 31 Cash

12/31/24

2023
Dec. 31 Cash

2024
Dec. 31 Cash
ee-year term are as follows:

₱ 100,000.00
₱ 400,000.00
₱ 450,000.00
Equipment ₱ 800,000.00
Gain on Sale on Equipment ₱ 150,000.00
₱ 950,000.00 ₱ 950,000.00

₱ 60,000.00
Interest Income ₱ 60,000.00
Receipt of annual interest
(15% × 400000)

₱ 60,000.00
Interest Income ₱ 60,000.00
Receipt of annual interest

₱ 460,000.00
Notes Receivable ₱ 400,000.00
Interest Income ₱ 60,000.00
Collection of note and interest due
₱ 460,000.00 ₱ 460,000.00
Equipment ₱ 800,000.00
Acummulated Depreciation-Euipment -₱ 450,000.00
Carrying Amount ₱ 350,000.00

Face value of note ₱ 400,000.00


Present value of note (0.6575 × 400000) -₱ 263,000.00
Discount on notes receivable ₱ 137,000.00

Cash received ₱ 100,000.00


Add present value of note ₱ 263,000.00
Total sales price of equipment ₱ 363,000.00
Carrying value of equipment -₱ 350,000.00
Gain on sale of equipment ₱ 13,000.00
2022
Jan. 1 Cash
Notes Receivable
Accumulated Depreciation-Equipment
Equipment
Discount on Notes Receivable
Gain on Sale of Equipment

The following are the entries after its receipt on January 1, 2022.

2022
Dec. 31 Discount on Notes Receivable
Interest Income
Amortization of discount
15% × 263000

2023
Dec. 31 Discount on Notes Receivable
Interest Income
Amortization of discount
15% × (263000 + 39450)

2024
Dec. 31 Cash
Discounts on Notes Receivable
Notes Receivable
Interest Income
Collection of note and final amortization of discount
Amortization Table
₱ 100,000.00 Date Interest Income Amortized Cost
₱ 400,000.00 January 1, 2022 ₱ 263,000.00
₱ 450,000.00 December 31, 2022 ₱ 39,450.00 ₱ 302,450.00
₱ 800,000.00 December 31, 2023 ₱ 45,368.00 ₱ 347,818.00
₱ 137,000.00 December 31, 2024 ₱ 52,182.00 ₱ 400,000.00
₱ 13,000.00
₱ 950,000.00 ₱ 950,000.00

₱ 39,450.00
₱ 39,450.00

₱ 45,368.00
₱ 45,368.00

₱ 400,000.00
₱ 52,182.00
₱ 400,000.00
₱ 52,182.00
Equipment ₱ 800,000.00
Acummulated Depreciation-Euipment - 450,000.00
Carrying Amount ₱ 350,000.00

Cash ₱ 100,000.00
Notes Receivable ₱ 300,000.00 /3

December 31, 2022 ₱ 100,000.00


December 31, 2023 ₱ 100,000.00
December 31, 2024 ₱ 100,000.00

Face value of note ₱ 300,000.00


Present value of note (100000 × 2.2832) -₱ 228,320.00
SciCal - 1/(1 + 15% or .15)³ = .6575 - 1 = total ÷ 15% or .15
Discount on notes receivable ₱ 71,680.00

Cash received ₱ 100,000.00


Add present value of note ₱ 228,320.00
Total sales price of equipment ₱ 328,320.00
Carrying value of equipment ₱ 350,000.00
Loss on sale of equipment ₱ 21,680.00
2022
Jan. 1 Cash
Notes Receivable
Acummulated Depreciation-Euipment
Loss on Sale Equipment
Equipment
Discount on Notes Receivable

The entries on December 31, 2022, 2023, and 2024 are as follows:

2022
Dec, 31 Discount on Notes Receivable
Interest Income
Amortization of discount

Dec. 31 Cash
Notes Receivable
Collection of the first installment

2023
Dec. 31 Discount on Notes Receivable
Interest Income
Amortization of discount

Dec. 31 Cash
Notes Receivable
Collection of the second installment

2024
Dec. 31 Discount on Notes Receivable
Interest Income
Amortization of discount

Dec. 31 Cash
Notes Receivable
Collection of the third and final installment
Amortization Table
₱ 100,000.00 A
₱ 300,000.00
₱ 450,000.00 Date Periodic Payment
₱ 21,680.00 January 1, 2022
₱ 800,000.00 December 31, 2022 ₱ 100,000.00
₱ 71,680.00 December 31, 2023 ₱ 100,000.00
₱ 871,680.00 ₱ 871,680.00 December 31, 2024 ₱ 100,000.00

₱ 34,248.00
₱ 34,248.00

₱ 100,000.00
₱ 100,000.00

₱ 24,385.00
₱ 24,385.00

₱ 100,000.00
₱ 100,000.00

₱ 13,047.00
₱ 13,047.00

₱ 100,000.00
₱ 100,000.00
B C D
Applied to Interest Applied to Principal Balance of Principal
(Previous D × 15%) (A - B) (Previous D - C)
₱ 228,320.00
₱ 34,248.00 ₱ 65,752.00 ₱ 162,568.00
₱ 24,385.00 ₱ 75,615.00 ₱ 86,953.00
₱ 13,047.00 ₱ 86,953.00 ₱ -

You might also like