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QUIZ 1 Part 1

On January 1, 2019, COCO Inc. sold equipment for cash and a note receivable of P1,000,000 payable in 4 annual installments. It also sold a machine for cash and a note receivable of P1,000,000 due on January 1, 2023. COCO Bank extended a P10,000,000 loan at 10% interest and collected fees. It also loaned MACAO IMPERIAL P2,000,000 at 12% interest, which was later impaired with revised payment terms.

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Jerah Marie Pepito
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40 views2 pages

QUIZ 1 Part 1

On January 1, 2019, COCO Inc. sold equipment for cash and a note receivable of P1,000,000 payable in 4 annual installments. It also sold a machine for cash and a note receivable of P1,000,000 due on January 1, 2023. COCO Bank extended a P10,000,000 loan at 10% interest and collected fees. It also loaned MACAO IMPERIAL P2,000,000 at 12% interest, which was later impaired with revised payment terms.

Uploaded by

Jerah Marie Pepito
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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QUIZ 1 Part 1

On January 1, 2019, COCO Inc. sold transportation equipment with a historical cost of
P2,000,000 and Accumulated Depreciation of P700,000 in exchange for cash of P100,000 and a non-
interest bearing note receivable of P1,000,000 due in 4 equal annual installments starting on
December 31, 2019 and every December 31 thereafter. The prevailing rate of interest for this type of
note is 12%.

On January 1, 2019, COCO Inc. sold a machine with a historical cost of P1,500,000 and a
carrying amount at the time of sale of P1,100,000 in exchange for a cash of P200,000 and a non-
interest bearing note receivable of P1,000,000 due on January 1, 2023. The prevailing interest for
this type of note is 12%.

1. Journal entry to record sale of transportation equipment on January 1, 2019.


2. Journal entry to record sale of machinery on January 1, 2020.
3. Entry to record collection of principal on December 31, 2019.
4. Entry to record the amortization on December 31, 2019.
5. Entry to record collection of principal on December 31, 2020.
6. Entry to record the amortization on December 31, 2020.
7. Carrying Amount of Notes Receivables as of December 31, 2020.
8. Carrying Amount of Notes Receivables as of December 31, 2021.
9. Carrying Amount of Notes Receivables as of December 31, 2022.
QUIZ 1 Part 2

On January 1, 2019, COCO Bank extended a P10,000,000 loan to BTS, Inc. due on December
31, 2023 and annual interest of 10% payable every December 31. The bank incurred a total direct
organization cost of P449,992 and collected origination fees from borrower amounting to
P1,823,212. After considering the organization fees, the new effective rate of the loan is 14%

Another loan was granted by COCO Bank on June 30,2019 to MACAO IMPERIAL, Inc.
amounting to P2,000,000 due on June 30,2023 with annual interest of 12% payable every December
31 and June 30.
MACAO IMPERIAL, Inc. paid the interest until December 31, 2021. On June 30, 2022, after
recording the accrued interest receivable, the borrower was under financial difficulty and the loan
was considered impaired. The bank and the borrower has agreed on the following considerations:
 No more payment of interest
 Principal payment will be made as follows:
June 30, 2023 - P500,000
June 30, 2024 - P1,000,000
June 30, 2025 P500,000

1. Journal Entry to record loan granted on January 1, 2019.


2. Journal Entry to record the payment of direct origination fees on January 1, 2019.
3. Journal Entry to record the collection of origination fees on January 1, 2019.
4. Journal Entry to record loan granted on June 30, 2019.
5. Entry to record collection of interest on December 31, 2019.
6. Entry to record accrual of interest income and amortization on December 31, 2019.
7. Entry to record collection of interest on June 30, 2020.
8. Entry to record collection of interest on December 31, 2020.
9. Entry to record accrual of interest income and amortization on December 31, 2020.
10. Entry to record collection of interest on June 30, 2021.
11. Entry to record collection of interest on December 31, 2021.
12. Entry to record accrual of interest income and amortization on December 31, 2021.
13. Entry to interest from Macao Imperial Tea on June 30, 2022.
14. Entry to record impairment loss, if any on June 30, 2022.
15. Entry to record amortization of unearned interest income on December 31, 2022.
16. Entry to record amortization of allowance for the loan impairment on December 31, 2022.
17. Entry to record collection of loan on June 30, 2023.
18. Entry to record the amortization of allowance for loan impairment on June, 2023.
19. Entry to record amortization of unearned interest income on December 31, 2023.
20. Entry to record collection of full payment of loan from BTS, Inc.
21. Carrying Amount of Loan Receivable as of December 31, 2023.

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