Valix Finacc vol 1 Problem 6-4

Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 6-4

Requirement 1

2008

Oct.  1  Cash                                                                                       3,600,000

             Discount on note payable (10% x 4,000,000)                             400,000

                      Note payable – bank                                                                         4,000,000

          1  Interest expense (400,000 x 3/12)                                               100,000

                      Discount on note payable                                                                    100,000

2009

Oct.  1  Note payable – bank                                                             4,000,000

                      Cash                                                                                                   4,000,000

Dec. 31  Interest expense                                                                        300,000

                       Discount on note payable                                                                   300,000

Requirement 2

Current liabilities:

      Note payable – bank (Note 3)                                                                           4,000,000

      Discount on note payable                                                                                           (   300,000)

      Carrying value                                                                                                    3,700,000

 

Note 3 – Note payable – bank

Accounts of P5,000,000 are pledged to secure the bank loan of P4,000,000.