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Ch02 - Notes Payable

Authored by Jay Molina

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Ch02 - Notes Payable
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10 questions

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1.

FILL IN THE BLANK QUESTION

5 mins • 1 pt

Problem 3.1

On January 1, 20x1, Bark, Inc. issues a noninterest-bearing note of P2,000,000 in exchange for equipment. The note is due on December 31, 20x3. The effective interest rate is 16%.

Required: How much is the carrying amount of the note on December 31, 20x2?

2.

FILL IN THE BLANK QUESTION

5 mins • 1 pt

Problem 3.2

On January 1, 20x1, J7J Co. issues a noninterest-bearing note of P3,000,000 in exchange for equipment. The note is due in three equal annual installments every December 31. The effective interest rate is 18%.

Required: How much is the carrying amount of the note to be presented as current portion in the Statement of Financial Position on December 31, 2021.

3.

FILL IN THE BLANK QUESTION

5 mins • 1 pt

Problem 3.3

On January 1, 20x1, Drive Co. paid cash of P200,000 and issued a noninterest-bearing note P2,000,000 in exchange for a vehicle. The note is due in four equal annual installments. the first installment is due on January 1, 20x1 and the succeeding installments are due every 1st of January. the prevailing rate of interest for this type of note is 12%.

Required: How much is the carrying amount of the note on December 31, 2021?

4.

FILL IN THE BLANK QUESTION

5 mins • 1 pt

Media Image

Problem 3.4

Help the inexperienced accountant of Ala-alipaw Co. reconstruct the information required in the numbered blanks as shown in Table 1.1 (please see attached image)

Required: How much is the interest expense in 20x2?

5.

FILL IN THE BLANK QUESTION

5 mins • 1 pt

Media Image

Problem 3.5

The current and noncurrent portions of Baa-baa Co.'s note payable at the end of the 1st year are P213,534 and P507,016, respectively. The note is payable in four equal annual payments of P300,000 every December 31. Baa-baa Co. reported interest expense of P86,466 in the 2nd year. The note was initially recognized at P911,205 on Jan 1 of Year 1.

Required: How much is the carrying amount of the note on December 31, 20x3?

6.

FILL IN THE BLANK QUESTION

5 mins • 1 pt

Problem 4.1

On October 1, 20x1 Tank Co. borrowed P120,000 and issued a two-year note with 10% compounded interest. Interest is payable in full at maturity on September 30, 20x3.

Required: What amount of interest payable should Tank Co. report on December 31, 20x2?

7.

FILL IN THE BLANK QUESTION

5 mins • 1 pt

Problem 4.5

House Publishes offered a contest in which the winner would receive P1,000,000, payable over 20years. On December 31, 2000, House announced the winner of the contest and signed a note payable to the winner for P1,000,000, payable in P50,000 installments every January 2. Also on December 31, 2000, House purchased an annuity for P418,250 to provide the P950,000 prize monies remaining after the first P50,000 installment, which was paid on January 2, 2001.

Required: In its December 31, 2000 balance sheet, what amount should House report as note payable - contest winner, net of current portion?

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