On january 1, 2022, Formatted Company sold a tract of land that it acquired several years ago for 2,800,000.

Formatted compa
received a 3 year non-interest bearing note for 4,500,000 in exchange for the land. There is no readily available fair value for t
land, but the current market rate of interest for comparable notes is 8%. The note is payable in equal annual installments of
1,500,000 every Dec. 31 starting Dec. 31, 2022. (Round present value factor to 4 decimal places)
(a) What is the amount of interest revenue recognized in Formatted's profit and loss for 2022 and 2023?
(b) What is the carrying value of the note on December 31, 2022?
c. What amounts of the note shall be classified as current assets and non-current assets?

Face value of the note 4,500,000

Present Value of the note(2.5771 x 1.5 mil) 3,865,650
Discount on notes receivable 634,350

Amortization Table
Date Periodic Payment Applied to interest Applied to principal
January 1, 2022
December 31, 2022 1,500,000 309,252.00 1,190,748.00
December 31, 2023 1,500,000 213,992.16 1,286,007.84
December 31, 2024 1,500,000 111,105.84 1,388,894.16
(a)
Dec. 31, 2022 Discount on Notes Receivable 309,252
Interest Revenue

Dec. 31, 2023 Discount on Notes Receivable 213,992.16

Interest Revenue
(b)
Periodic payment 1,500,000
less discount on notes receivable -309,252
Carrying value of the note in Dec. 31, 2022 1,190,748

c.) Total Current

Notes Receivable 3,000,000 1,500,000
Discount on Notes Receivable 325,098.00 213,992.16
Carrying Amount 2,674,902.00 1,286,007.84
everal years ago for 2,800,000. Formatted company
land. There is no readily available fair value for the
note is payable in equal annual installments of
o 4 decimal places)
nd loss for 2022 and 2023?

rent assets?

Balance of the principal

3,865,650
2,674,902
1,388,894.16
-

309,252 Interest revenue for 2022

213,992.16 Interest revenue for 2023

Non-Current
1,500,000
111,105.84
1,388,894.16
On January 1, 2022, Pingky Pip Company sold a piece of land with a carrying amount of 6,000,000 in exchange for a promis
face amount of 7,500,000 and stated interest rate of 14%. The note is payable in annual installements of 2,500,000 plus ac
on the outstanding balance. The first installment is due on Dec. 31, 2022. There is no established cash price for the land an
no ready market. The prevailing interest for a note of this type is 10%. (Round of to the neares peso.)
(a) Prepare an amortization table

Present Value of the note computation

Date Principal Due Interest Due Total Amount Due
December 31, 2022 2,500,000 1,050,000 3,550,000.00
December 31, 2023 2,500,000 700,000 3,200,000.00
December 31, 2024 2,500,000 350,000 2,850,000.00
Total
Present Value of the note 8,013,172.00
Face value of the note 7,500,000.00
Premium on notes receivable 513,172.00

Present value of the note 8,013,172.00

Carrying amount of the land 6,000,000.00
Gain on sale of land 2,013,172.00

Amortization Table
Date Effective Interest Nominal Interest Premium Amortization
Jan. 1 2022
Dec. 31, 2022 801,317 1,050,000 248,683
Dec. 31, 2023 526,449 700,000 173,551
Dec. 31, 2024 259,062 350,000 90,938

(b) Prepare all journal entries to record the transactions from January 1, 2022 to December 31, 2024.

2022, Jan. 1 Notes Receivable 7,500,000

Premium on Notes Receivable 513,172
Land
Gain on Sale of Land

2022, Dec. 31 Cash 3,550,000

Notes Receivable
Interest Revenue
Premium on Notes Receivable

2023, Dec. 31 Cash 3,200,000

Notes Receivable
Interest Revenue
Premium on Notes Receivable

2023, Dec. 31 Cash 2,850,000

Notes Receivable
Interest Revenue
Premium on Notes Receivable
nt of 6,000,000 in exchange for a promissory note with
nnual installements of 2,500,000 plus accrued interest
no established cash price for the land and the note has
o the neares peso.)

Present Value Factor Present Value, Jan 1, 2022

0.90909 3,227,270
0.82645 2,644,640
0.75132 2,141,262
8,013,172

ble
Principal Payment Note Carrying Value
8,013,172
2,500,000 5,264,489
2,500,000 2,590,938
2,500,000 -

ecember 31, 2024.

6,000,000
2,013,172

2,500,000
801,317
248,683

2,500,000
526,449
173,551

2,500,000
259,062
90,938
World Company measures its expected credit losses by grouping its accounts receivable based on age. The following summ
prepared from an aging of accounts receivable outstanding on December 31, 2022.

No. of Days Outstanding Amount Probability of Collection

0-30 days 500,000 98%
31-60 days 200,000 90%
Over 60 days 100,000 80%
The following information is available for the current year:

Net Credit Sales for the year 4,000,000.00

Allowance for uncollectible accounts, Jan 1, 2022 5,000.00
Allowance for uncollectible accounts, Dec. 31, 2022 2,000.00
(before adjustments)
Required:
Determine the Receivables Impairement Loss and Loss Allowance that World Company should report in its 2022 financial s

500,000 x 2% 10,000
200,000 x 10% 20,000
100,000 x 20% 20,000
Total Loss Allowance 50,000
less existing allowance 3,000.00
Receivables Impairment Loss 47,000.00
based on age. The following summary schedule was

Probability of Non-collection
2%
10%
20%

cr
dr

hould report in its 2022 financial statements?

Revo Company has an impairment loss allowance balance of 34,000 on Jan. 1, 2022. During 2022, it wrote off accounts tot
accounts written off in prior years. On Dec. 31, 2022, an aging of its accounts receivable showed:

Amount % of Uncollectible
Not yet due 340,000 0%
1-30 days 240,000 5%
31-60 days 20,000 25%
61-90 days 30,000 50%
Over 90 days 24,000 90%
Additional accounts to 6,000
be written off

(a) Receivable impairment loss for 2022

Uncollectible Collectible
340,000 0 340,000.00
240,000 12,000 228,000.00
20,000 5,000 15,000.00
30,000 15,000 15,000.00
24,000 21,600 2,400.00
Total Required allowance 53,600
Less existing allowance 46,000
Additional Impairment loss recognized 7,600
Add impairment loss balance, Jan 1 34,000
Receivable Impairment loss for 2022 41,600

(b) Amortized cost of accounts receivable on December 31, 2022

Accounts Receivable 7,000

340,000
228,000
15,000
15,000
2,400
Total Accounts Receivable 607,400
Less receivable impairment loss - 41,600
Amortized cost of Accounts Receivable 565,800
2022. During 2022, it wrote off accounts totaling 47,000 and recovered 7,000 of
eceivable showed:
Accord Company had the following transactions during 2022:

Jul-01 Accord assigned 5,000,000 of accounts receivable to a bank in consideration of a loan. The bank ad
assigned accounts receivable less charge of 5% based on the amount of the loan. Customers were
assignment, thus, Accord continues to make collection.

Jul-21 Accord issued a credit memo to a customer whose account is assigned with the bank, for defective
amounting to 200,000

Jul-31 Accord collected 2,500,000 of assigned accounts less 2% cash discount.

Aug-01 Remitted 2,500,000 to the bank plus one month interest at 12% per year

Aug-15 Wrote off worthless assigned accounts amounting to 50,000

Aug-31 Collected 2,000,000 of assigned accounts

Sep-01 Paid the balance due to the bank, plus 12% interest, which reverted the balance of the assigned ac

Prepare journal entries for the foregoing transactions:

Jul-01 Accounts Receivable Assigned 5,000,000

Accounts Receivable
To record Assigned receivables

Cash 4,750,000
Finance charges 250,000
Notes Payable
To record loan from finance company

Jul-21 Sales Returns and Allowances 200,000

Accounts Receivable Assigned
To record credit memo

Jul-31 Cash 2,450,000

Sales Discount 50,000
Accounts Receivable Assigned
To record collection

Aug-01 Notes Payable 2,475,000

Interest expense 25,000
Cash
To record remittance to finance company

Aug-15 Uncollectible Accounts expense 50,000

Allowance for Uncollectible Accounts
To record write off worthless assigned account

Aug-31 Cash 2,000,000

Accounts Receivable Assigned
To record collection
Sep-01 Notes payable 1,760,000
Interest expense 240,000
Cash
Final payment to the bank

Accounts Receivable 500,000

Accounts Receivable Assigned
Reverted the remaining assigned accounts to accounts receivable
k in consideration of a loan. The bank advanced 80% of the 4,000,000.00
he amount of the loan. Customers were not notified of the - 200,000.00
3,800,000.00

t is assigned with the bank, for defective merchandise returned

ash discount.

12% per year

reverted the balance of the assigned accounts in final settlement.

5,000,000

5,000,000

200,000

2,500,000

2,500,000

50,000

2,000,000
2,000,000

500,000