2-4, 2-5. 2-6. - Recetvable: On January 1, 2022, Format Company seid poset it acquired several years ago for P2,800,0 due on December 3° Ron-interest-bearing note for P4,500,000 due on available pe 2028 in exchange for the land. There is no readily av bls value for the land, but the current market fe S Gee for comparable notes is 8%. (Rotnd present valu mR. to 4 decimal places. REQUIRED: (@) What are the amounts of interest revenue recognized in Format’s profit and loss for the years ended December 31, 2022 and 2023? (6) What is the carrying value of the note on December 31, 2022 and December 31, 2023? () How would the note receivable be classified on the Statement of financial position on December 31, 2022 and December 31, 2023? On January 1, 2022, Formatted Company sold a tract of land that it acquired several years ago for P2,800,000. Formatted received a three-year, non-interest-bearing note for P4,500,000 in exchange for the land. There is no readily available fair value for the land, but the current market rate of interest for comparable notes is 8%. The note is payable in equal annual installments of P1,500,000 every December 31, starting December 31, 2022. (Round present value factors to 4 decimal places.) ~ REQUIRED: (2) | 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, 20222 (c) What amounts of the note shall be classified as current assets and non-current assets on December 31, 2022 CRV Company has a 6% note receivable dated October 1, 2022 in the original amount of P3,000,000. Payments of P1,000,000 in principal plus accrued interest are due annually on September 30, 2023, 2024, and 2025. 1282-7, 2-8, REQUIRED; (4) Compute the amounts that will be collected on Sey 90, 2023, 2024 and:2025, Ren (b) Compute the interest revenue for the year ended December , 2023, (oe) How much of the note receivable and interest receivable hall CRV Company classify as current assets ant non- current assets on the December 31, 2023 statement of JSinancial position? On January 1, 2022, Pinky Pop Company sold a Piece of land with a carrying amount of P6,000,000 in exchange for a 5% payable in annual installments of P2,500,000 plus accrued interest on the outstanding balance. The first installment is for the land and the note has no ready market. ‘The Prevailing interest rate for a note of this type is 10%. (Use the present value factors from the appropriate Table in the Appendix) REQUIRED: (Round off figures to nearest peso) ~ (@) Prepare an amortization table (follow the format presented in this chapter). ()) Prepare all journal entries to record the transactions from January 1, 2022 to December 31, 2024. On January 1, 2022, Pinky Pip Company sold a piece of land with a carrying amount of P6,000,000 in exchange for a Promissory note with face amount of P7,500,000 and stated interest rate of 14%. The note is payable in annual installments of P2,500,000 plus accrued interest on the outstanding balance. The first installment is due on December 31, 2022. There is no established cash price for the land and the note has no ready market. The prevailing interest for a note of this type is 10%. (Use the present value factors from the Appropriate Table in the Appendix) REQUIRED: (Round off figures to nearest peso.) (a) Prepare an amortization table (6) Prepare all journal entries to record the transactions from January 1, 2022 to December 31, 2024. 129Chapter 2 - Receivables is itios 2-9. The statement of financial post shows the accounts receivable balance f Toyota Products, }, non December 31, 202) ie follows: A de P450,009 Accounts Receivable - tra — 9000 During 2022, Toyota Products, st Allowance for Uncollectible Accounts Inc. completed the following elected transactions: a. ‘Sales on account, P4,800,000. b. P3,920,000,after discounts of P80,000 were allowed for prompt payment, c. Issued credit memo to customers for sales returns, P60,000. d. Wrote off customers’ accounts of P20,000. e. Recovered P5,000 of accounts written off before 2021. f. Received a 90-day, 12% note for P25,000 from a customer on an overdue account. g. Pledged accounts receivable‘of P700,000 to a local bank on a loan of P400,000. Toyota collected P150,000 of these - receivables (not included in the collections previously given) and applied the amount as partial payment to the loan. h. Based’ on assessment of the impairment of receivables, Toyota estimated that allowance for uncollectible accounts should be P59,000 on December 31. i. Recorded the accrued interest on the note in (f). The note was dated December 1, 2022. ‘REQUIRED: Prepare journal entries to record the Cash received from collection of current receivable totaleq foregoing transactions. Afie" preparing the journal entries, determine gh rtized cost of the accounts receivable on December 31, 2022,” for 130Chapter 2 ~ Re 2-10. Word Company measures its expected credit losses by grouping 2-11. its ‘accounts receivable based on age. The following summary schedule was prepared from an aging of accounts receivable outstanding on December 31, 2022. No. of Days Outstanding Amount Probability of Collection 0 - 30 days P500,000 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 Allowance for uncollectible accounts, 1/1/2022 5,000(cr.) Allowance for uncollectible accounts, 12/31/2022 (before adjustment) 2,000(dr.) REQUIRED: Determine the Receivables Impairment Loss and Loss Allowance that Word Company should report in its 2022 financial statements. ‘ You determined the following year-end amounts after examining the records of Edit Company 2022 2021 Net credit sales P1,200,000 1,050,000 Accounts Receivable 305,000 260,000 Allowance for Uncollectible Accounts 12,000 6,000 Uncollectible accounts written off in previous year and then recovered this year 3,000 - Your examination indicates that Edit recorded uncollectible accounts expense of P48,000 during 2022. REQUIRED: What is the amount of the accounts receivable actually written off during 2022? You obtained the following balances of selected accounts: from the December 31, 2021 statement of financial position of Rav, Inc.: 131Chapter 2 - Receivables P 337,009 Accounts Receivable Impairment Loss Allowance 12,009 The following transactions (in summary) affecting “account, ed December 31, 2029. receivable occurred during the year end Sales (all on account, terms: 2/10, 1/15, n/60) P1,500,009 Cash received from customers 1,600,009 From customers paying within the 10-day discount period 882,009 | From customers paying within the 15-day discount period 495,000 From recovery of accounts written off ‘ 3,000 | discount period > | From customers paying beyond the Accounts receivable written off as worthless 11,000 Credit memoranda for sales returns 6,000 Rav recognized an impairment loss of P15,000 on its accounts receivable based on assessment of the collectability of the accounts. Compute Accounts Receivable and Impairment Loss Allowance on December 31, 2022. 2-13. Revo Company has an impairment loss allowance balance of P34,000,on January 1, 2022. During 2022, it wrote off accounts totaling P47,000 and recovered P7,000 of accounts written off in prior years.’ On December 31, 2022, an aging of its accounts receivable showed: Amount % Uncollectible Not yet due P340,000 0% 1-30 days past due 240,000 5% 31-60 days past due 20,000 25% 30,000 50% 61-90 days past due Over 90 days past due 24,000 90% 6,000 Additional accounts to be written off REQUIRED: Show computations for the following - (a) Receivable impairment loss for 2022 Amortized cost of accounts receivable on December 3} () 2022 132 |Chapter 2 ~ Receivables 2-14. The financial statements of Adventure Company reported the 2-15. following selected accounts. Accounts Receivable, January 1, 2022 P1,200,000 Impairment Loss Allowance, January 1, 2022 60,000 Sales during 2022 10,000,000 Cash collected from customers 8,720,000 The cash collected from customers included a P20,000 recovery from a customer whose account was written off in prior yean On November 15, a customer settled his overdue account by issuing a 15%, 4-month note for P400,000. During 2022, Adventure wrote off accounts of P100,000. An analysis of the accounts receivable at December 31, 2022 revealed that P600,000 were considered past due. Management's estimated that probable loss on past’ duc accounts is 20% and on current accounts is 5%. REQUIRED: Determine the following - (a) Adjusted balance of Impairment Loss Allowance on December 31, 2022 (6) Impairment loss for 2022. (<) Amortized cost of accounts receivable on December 31, 2022 On January 2, 2022, Maya Finance Company lent P1,000,000 to James Trading. James Trading agreed to repay the loan to Maya Finance after six years, with interest at 8% payable every year end, starting on December 31, 2022. Based on the credit information obtained by Maya Finance for James Trading as of December 31, 2022, the probability of default for the next 12 months is 4% and Maya expected to collect only 95% of the principal loan. . REQUIRED: (2) How much impairment loss should Maya Finance Company recognize on the loans receivable from James Trading in its 2022 profit or loss? (b) How much amortized cost should Maya Finance report in its December 31, 2022 statement of financial position at December 31, 2022, relating to this loan? 133=fapter 4 - Receivables ing the inte 2-16. Use the same data given in 2-15. After oor over tne rea December 31, 2023, the probability pees ead thet expectes ; four years of the Joan increased tO LI", Se 7504, However, ea i ce recovery of the principal loan is reduce z z a t there is no objective evidence of receivable impairment at this time. REQUIRED: u impair Maya Finance Compan, (a) How much impairment loss should Company ; recognize on the loan receivable from James Trading in its 2023 profit or loss? Id Maya Finance Company (b) How much amortized cost shoul n report in its December 31, 2023 statement of financiat position relating tb this loan? 2-17. Maynilad Bank has a P10,000,000 loan to ABC Realty which the invested in real estate development. Due to the economic downtrend in the real estate business, ABC Realty experiences declining sales and is likely to default on its obligation to Maynilad. ABC requests for a restructuring of its ‘loan with Maynilad. ‘The prevailing market rate of interest for similar obligations at the time of restructuring is 8%. Accrued interest receivable on the loan on December 31, 2022 was P1,000,000, based on stated interest rate of 10%. Maynilad had not previously recognized any impairment on this ABC note based on 12-month expected credit loss on date of initial recognition. For each of the following alternative restructuring arrangements, determine the amount of the impairment loss.to be recognized by Maynilad Bank, and give the entry in the books of the company to record the impairment. (Round off present value factors to four decimal places) Alternative 1 Reduction of principal to P9,000,000 Condonation of accrued interest Extension of maturity date to December 31, 2024 Reduction of interest rate to 8%, payable annually on December 31, 134Alternative 2 Alternative 3 Alternative 4 Chapter 2 ~ Receivables Condonation of accrued interest Principal amount of P2,000,000 plus interest on the unpaid principal reduced to 8%, payable in annual installments to begin December 31, 2023, Payment of the accrued interest on the date of restructuring (December 31, 2022) Extension of maturity date of the loan to December 31, 2024, With interest during the extended term at 7% payable on December 31, 2023 and 2024. Extension of maturity date to December 31, 2024. Interest at 10% on the carrying value of the loan {P11,000,000) payable December 31, 2023 and December 31, 2024. The present condition of ABC Realty indicates that it has the ability to meet the modified terms as indicated. 2-18. On April 1, 2022, the Kate Company issued a P750,000, 12% note due on May 31, 2022 to National Bank Company for money borrowed. Kate Company pledged P900,000 of its accounts receivable as collateral for this loan. 2-19, REQUIRED: (a) Record any necessary entry on April 1, 2022 in the books of Kate Company as a result of the foregoing. (b) Assume that Kate Company’s reporting period ends April 30. Show how it will show the effects of the preceding transactions in its statement of financial position. The company’s total accounts receivable on April 30, 2022 is P3,000,000. On September 1, 2022, Lexus Company assigned specific receivables totaling P800,000 to Pacific Bank’as collateral on a 650,000, 12% note. Under the agreement, Lexus will continue to collect the assigned accounts. Pacific also assesses a 2% service charge based on the total accounts receivable assigned. 135Chapter 2 - Receivables 2-20. monthly payments to Pacific wig, nts. 000 of accounts assigned: j In September, Lexus collected 900,008 | faterest on the Inq” remitted this amount plus one” smber 30. balance to the finance company on SePt© Lexus Company will make mor cash collected on assigned acco 00 and collected P400,000 of oan balance plus interest tg In October, Lexus wrote off P10,0' verted the assigneg i it the I assigned accounts. It remitted th oe Pacific Bank on October 31. Pacific Banik accounts receivable balance to Lexus- ‘REQUIRED: Prepare journal entries in the boo! the foregoing transactions. ks of Lexus Company to record ‘Accord Company had the following transactions during 2022. ‘Accord assigned P5,000,000 of accounts receivable to a bank in consideration’ of a loan. The bank advanced 80% of the assigned accounts receivable less service charge of 5% based on the amount of the loan. Customers were not notified of the assignment; thus, Accord continues to make the collection. July 1 21 Accord issued a credit memo to a customer, whose account is assigned with the bank, for defective merchandise returned amounting to P200,000. 31. Accord collected P2,500,000 of assigned accounts, less 2% cash discount. Aug. 1 Remitted P2,500,000 to the bank plus one month interest at 12% per year. 15 Wrote off worthless assigned accounts amounting t0 PS0,000. 31 Collected P2,000,000 of assigned accounts. Sept. 1 Paid the balance due to the bank, interest d , plus 12% interest which reverted the balance of igned accounls in final settlement. Gohan REQUIRED: Prepare journal entries for the foregoing transactions 136