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Friday, August 6, 2010

Valix Finacc vol 1 Problem 6-8

Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 6-8


Requirement a


Dec. 1   Accounts receivable – assigned                                          1,500,000
                       Accounts receivable                                                                           1,500,000

         1   Cash                                                                                    1,250,000
               Service charge                                                                       50,000
                       Note payable – bank                                                                          1,300,000

       31   Cash                                                                                       970,000
               Sales discount                                                                         30,000
                        Accounts receivable – assigned                                                       1,000,000

       31   Interest expense (1% x 1,300,000)                                            13,000
               Note payable – bank                                                           957,000
                        Cash                                                                                                      970,000

Requirement b


The accounts receivable – assigned with a balance of P500,000 should be classified
as current asset and included in trade and other receivables.

The note payable – bank of P343,000 should be classified and presented as a current liability.

The company should disclose the equity in assigned accounts as follows:

Accounts receivable – assigned                                                                                     500,000
Note payable – bank                                                                                                    (343,000)
Equity in assigned accounts                                                                                           157,000

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