On october 1 of the current year an entity received a

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College Accounting, Chapters 1-27
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Chapter 17 / Exercise P 17-14A
College Accounting, Chapters 1-27
Heintz/Parry
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12. On October 1 of the current year, an entity received a one-year note receivablebearing interest at the market rate. The face amount of the note receivable and theentire amount of the interest are due on September 30 of next year. The interestreceivable on December 31 of the current year would consist of an amountrepresentinga. Three months of accrued interest incomeb. Nine months of accrued interest incomec. Twelve months of accrued interest income
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College Accounting, Chapters 1-27
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Chapter 17 / Exercise P 17-14A
College Accounting, Chapters 1-27
Heintz/Parry
Expert Verified
d. The excess on October 1 of the present value of the note receivable overits face amount13. An entity uses the installment sales method to recognize revenue. Customerspay the installment notes in 24 equal monthly amounts which include 12% interest.What is the installment notes receivable balance six months after the sale?a. 75% of the original sales priceb. Less than 75% of the original sales pricec. The present value of the remaining monthly payments discountedat 12%.d. Less than the present value of the remaining monthly paymentsdiscounted at 12%14. On July 1 of the current year, an entity obtained a two0year 8% note receivablefor services rendered. At that time, the market rate of interest was 110%. The faceamount of the note and the entire amount of interest are due on the date ofmaturity. Interest receivable are due on the date of maturity. Interest receivable onDecember 31 of the current year isa. 5% of the face amount of the noteb. 4% of the face amount of the notec. 5% of the present value of the noted. 4% of the present value of the note15. An entity uses the installment sales method to recognize revenue. Customerspay the installment notes in 24 equal monthly amounts which include 12% interest.What is the installment notes receivable balance six months after the sale?a. 75% of the original sales priceb. Less than 75% of the original sales pricec. The present value of the remaining monthly payments discountedat 12%d. Less than the present value of the remaining monthly paymentsdiscounted at 12%
RECEIVABLE FINANCING AND IMPAIRMENT –ProblemsPROBLEM 1:Camia Company sold accounts receivable without recourse for 5,300,000. The entityreceived 5,000,000 cash immediately from the factor. The remaining 300,000 will bereceived once the factor verifies that none of the accounts receivable is in dispute.The accounts receivable had a face amount of 6,000,000. The entity had previouslyestablished an allowance for bad debts of 250,000 in connection with suchaccounts. What amount of loss on factoring should be recognized?a.700,000c. 750,000b.450,000d. 300,000SOLUTION:Sale price5,300,000Carrying amount of accounts receivable (6,000,000-250,000)5,750,000Loss on factoring(450,000)

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