Scribd Logo
Upload

Welcome to Scribd!

  • 13 views

    Notes Receivable

    Uploaded by

    Simon D. San Gabriel
    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.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content

    You might also like

    Notes Receivable

    Uploaded by

    Simon D. San Gabriel
    13 views12 pages
    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.

    Original Description:

    Copyright

    © © All Rights Reserved

    Available Formats

    XLSX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document
    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.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as xlsx, pdf, or txt
    13 views12 pages

    Notes Receivable

    Uploaded by

    Simon D. San Gabriel
    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.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as xlsx, pdf, or txt
    of 12

    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