Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 6-27 to 41 (Multiple Choice)
Problem 6-27 Answer C
Note payable 1,000,000
Discount on note payable (1,000,000 x 10.8%) ( 108,000)
Net proceeds 892,000
Discount on note payable 108,000
Amortization from August 1 to December 31 (108,000 x 5/12) ( 45,000)
Balance – December 31, 2008 63,000
Note payable 1,000,000
Discount on note payable ( 63,000)
Carrying value 937,000
Problem 6-28
Question 1 – Answer A Question 2 - Answer B
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Problem 6-29 Answer A
Problem 6-30 Answer C Problem 6-31 Answer C
Principal 500,000 Principal 200,000
Add: Interest (500,000 x 8%) 40,000 Less: Discount
Maturity value 540,000 (200,000 x 10% x 6/12) 10,000
Less: Discount Net proceeds 190,000
(540,000 x 10% x 6/12) 27,000
Net proceeds 513,000
Problem 6-32 Answer A
Principal 4,000,000
Interest (4,000,000 x 12% x 90/360) 120,000
Maturity value 4,120,000
Less: Discount (4,120,000 x 15% x 60/360) 103,000
Net proceeds 4,017,000
Principal 4,000,000
Interest revenue 17,000
Problem 6-33 Answer C Problem 6-34 Answer B
Principal 600,000 Note receivable – June 30, 2007 1,500,000
Add: Interest Less: Payment on July 1, 2008 500,000
(600,000 x 10% x 6/12) 30,000 Balance – July 1, 2008 1,000,000
Maturity value 630,000
Less: Discount Accrued interest from July 1, 2008
(630,000 x 12% x 4/12) 25,200 to June 30, 2009 (1,000,000 x 8) 80,000
Net proceeds 604,800
Problem 6-35 Answer C
Problem 6-36 Answer A
First payment on January 1, 2008 600,000
Present value of remaining six payments (600,000 x 4.36) 2,616,000
Correct sales revenue 3,216,000
Problem 6-37 Answer D Problem 6-38 Answer C
Note receivable 1,000,000 The note receivable is shown at its value on
Unearned interest income ( 435,000) December 31, 2008.
Carrying value equal to present
value (100,000 x 5.65) 565,000 Face value – remaining nine
payments (500,000 x 9) 4,500,000
Present value (500,000 x 6.25) 3,125,000
Unearned interest income 1,375,000
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Problem 6-39
1. Answer C
Note receivable 6,000,000
Present value of note receivable (6,000,000 x .75) 4,500,000
Unearned interest income 1,500,000
Interest income:
2008 (10% x 4,500,000) 450,000
2009 (10% x 4,950,000) 495,000
2010 (1,500,000 – 450,000 – 495,000) 555,000
Total 1,500,000
2. Answer D
Present value of note receivable 4,500,000
Carrying amount of equipment 4,800,000
Loss on sale of equipment ( 300,000)
Problem 6-40 Answer B
Present value of note receivable (1,000,000 x .712) 712,000
Book value of equipment 800,000
Loss on sale ( 88,000)
Interest income for first year (12% x 712,000) 85,440
Problem 6-41 Answer D
NR from Hart 1,000,000
NR from Maxx (1,150,000 x .68) 782,000
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