INTERM 3 - NOTES PAYABLE
Solutions:
1) d. 2,320
Year
20X4: 10,000(0.12)(10/12) 1,000.00
20X5: (10,000 + 1,000)(0.12)(12/12) 1,320.00
Total Accrued Interest payable - Dec. 31, 2005 2,320.00
2) a. 652,174
Principal 5,000,000.00
PV of 1 @15, n=3 0.6575162
Present value 3,287,581.00
Principal 5,000,000.00
Less: Present value 3,287,581.00
Total 1,712,419.00
Date Interest Expense Discount on Notes Payable Present Value
Jan. 01, 20x1 1,712,419 3,287,581
Dec. 31, 20x1 492,137 1,219,282 3,780,716
Dec. 31, 20x2 567,107 652,174 437,825
3) b. 418, 250
Answer: 418, 250
Explanation:
The amount that House should report as note payable-contest winner, net of current portion is 418,250 which is the amo
It is considered as the present value of the nineteen payments after its first payment. In general we must also consider th
notes must be measured at its present value rather than its face value.
4) c. 468,250
First price on 1/2/ Year 2 ₱ 50,000.00
Present value of 19 subsequent payments 418,250.00
Contest prize expense in 2000 income statement ₱ 468,250.00
5) a. 3,114,884
Semi-annual interest = 4,000,000 x 3% / 2 = 60,000
Period Payments PV Factor: 1/ (1+12%/2)n Present value
1 60,000.00 0.943396236 56,604.00
2 60,000.00 0.889996440 53,400.00
3 60,000.00 0.839619283 50,377.00
4 60,000.00 0.792093663 47,526.00
5 60,000.00 0.747258173 44,835.00
6 60,000.00 0.704960540 42,298.00
Total 295,040.00
4,000,000 x 0.704961 = 2,819,844
Carrying amount of the note on initial recognition (2,819,844 + 295,040) = 3,114,884
on is 418,250 which is the amount of the annuity purchased.