The notes receiv able account forthe year ended December31, 2018 of Avery Inc., a trading corporation,...

 

 

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The notes receiv able account forthe year ended December31, 2018 of Avery Inc., a trading corporation, is composed of the following items: Note 1 - Notes receivable from sale of equipment P40,000 Note 2 - Notes receivable from the president P80,000 Notes receivable - others P40,600 Note 1: A P40,000, 2-year noninterest bearing note from Anne Company dated Aug 31, 2017. This note was received in exchange forthe machinery sold. On the date of sale, the machinery has a carrying value of P32,000. Prevailing interest rate forthis note is 12%. Note 2: A 1-year note from the president of Avery Inc., P80,000, dated January 31, 2018. The note has no interest and was confirmed by the president. On January 31, 2018, the effective interest rate of the note was at 9%. Other info: A5-month note from customer for P12,000 dated September 30, 2018. The interest rate is 9%. The note is held by bank as collateral. On July 1, 2017, a tract of land was sold to Grape Vines Company for P600,000 under instalment contract. On July 1, 2017, Grape Vines Company signed a 4-year 12% note for P400,000, in addition to the down payment of P200,000. The note is collectible in equal payments of P100,000 annually in principal plus interest based on outstanding balance every July 1 of each year, starting 2018. Required: 1. Correct interest income to be reported on December 31, 2018 in its statement of comprehensive income. 2. Amount of interest receivable as of December 31, 2018. 3. Current portion of notes receivable as of December 31, 2018 4. Noncurrent portion of notes receivable as of December 31,2018 The notes receiv able account forthe year ended December31, 2018 of Avery Inc., a trading corporation, is composed of the following items: Note 1 - Notes receivable from sale of equipment P40,000 Note 2 - Notes receivable from the president P80,000 Notes receivable - others P40,600 Note 1: A P40,000, 2-year noninterest bearing note from Anne Company dated Aug 31, 2017. This note was received in exchange forthe machinery sold. On the date of sale, the machinery has a carrying value of P32,000. Prevailing interest rate forthis note is 12%. Note 2: A 1-year note from the president of Avery Inc., P80,000, dated January 31, 2018. The note has no interest and was confirmed by the president. On January 31, 2018, the effective interest rate of the note was at 9%. Other info: A5-month note from customer for P12,000 dated September 30, 2018. The interest rate is 9%. The note is held by bank as collateral. On July 1, 2017, a tract of land was sold to Grape Vines Company for P600,000 under instalment contract. On July 1, 2017, Grape Vines Company signed a 4-year 12% note for P400,000, in addition to the down payment of P200,000. The note is collectible in equal payments of P100,000 annually in principal plus interest based on outstanding balance every July 1 of each year, starting 2018. Required: 1. Correct interest income to be reported on December 31, 2018 in its statement of comprehensive income. 2. Amount of interest receivable as of December 31, 2018. 3. Current portion of notes receivable as of December 31, 2018 4. Noncurrent portion of notes receivable as of December 31,2018

Answer rating: 100% (QA)

Answer 1 Value of note receivable for sale of equipment as on 1 January 2018 P 32000 3... View the full answer