On January 1, 2020, Toyota Corporation sold a piece of equipment costing P570,000 with accumulated depreciation...

  

Transcribed Image Text:

On January 1, 2020, Toyota Corporation sold a piece of equipment costing P570,000 with accumulated depreciation of P240,000 on the date of sale. In consideration of the sale, Toyota Corporation received a P600,000, non-interest-bearing promissory note, due on December 31, 2022. There was no established exchange price for the equipment, and the note had no ready market. However, the prevailing interest rate for similar types of notes was 10%. Present value factor of 1 at 10% for 3 periods is .75. REQUIREMENT How much is the interest income reported in 2020? What is the amortized cost of the note on December 31, 2021? Allen Company started business at the beginning of the 2020. Records showed that merchandise purchased for the year amounted to P4,500,000 and the ending inventory was P750,000. Goods were sold at 40% based on cost. The total sales comprised 80% sales on account and 20% cash sales. Total collections from customers, excluding cash sales, amounted P3,000,000. The entity established an allowance for doubtful accounts estimated at 5% of its outstanding accounts receivable. REQUIREMENT How much is the uncollectible accounts expense for 2020? What is the amortized cost of the accounts receivable in 2020? Honda Corporation received a 6%, interest-bearing notes receivable dated October 1, 2020 amounting to P4,500,000. Payments of P1,500,000 plus accrued interest are due annually on September 30, starting 2021 until 2023. REQUIREMENT How much is the total amount collected by Honda Corporation on September 30, 2021? How much is the interest income for the year ended, December 31, 2020? How much is the interest income for the year ended, December 31, 2020? On January 1, 2020, Toyota Corporation sold a piece of equipment costing P570,000 with accumulated depreciation of P240,000 on the date of sale. In consideration of the sale, Toyota Corporation received a P600,000, non-interest-bearing promissory note, due on December 31, 2022. There was no established exchange price for the equipment, and the note had no ready market. However, the prevailing interest rate for similar types of notes was 10%. Present value factor of 1 at 10% for 3 periods is .75. REQUIREMENT How much is the interest income reported in 2020? What is the amortized cost of the note on December 31, 2021? Allen Company started business at the beginning of the 2020. Records showed that merchandise purchased for the year amounted to P4,500,000 and the ending inventory was P750,000. Goods were sold at 40% based on cost. The total sales comprised 80% sales on account and 20% cash sales. Total collections from customers, excluding cash sales, amounted P3,000,000. The entity established an allowance for doubtful accounts estimated at 5% of its outstanding accounts receivable. REQUIREMENT How much is the uncollectible accounts expense for 2020? What is the amortized cost of the accounts receivable in 2020? Honda Corporation received a 6%, interest-bearing notes receivable dated October 1, 2020 amounting to P4,500,000. Payments of P1,500,000 plus accrued interest are due annually on September 30, starting 2021 until 2023. REQUIREMENT How much is the total amount collected by Honda Corporation on September 30, 2021? How much is the interest income for the year ended, December 31, 2020? How much is the interest income for the year ended, December 31, 2020?

Answer rating: 100% (QA)

Calculation of Interest Income reported in 2020 The interest income can be calculated using the effective interest method which involves recognizing interest income based on the prevailing interest ra... View the full answer