Scribd
Upload
96 views4 pages

Midterm Answer Key IA1

The document outlines financial problems related to loan origination, equipment sales, and accounts receivable management. It provides calculations for present value of notes, interest income, and allowances for doubtful accounts. Additionally, it details changes in accounts receivable and the corresponding adjustments in the allowance for doubtful accounts over specified periods.

Uploaded by

Clyde Saladaga
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
96 views4 pages

Midterm Answer Key IA1

The document outlines financial problems related to loan origination, equipment sales, and accounts receivable management. It provides calculations for present value of notes, interest income, and allowances for doubtful accounts. Additionally, it details changes in accounts receivable and the corresponding adjustments in the allowance for doubtful accounts over specified periods.

Uploaded by

Clyde Saladaga
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
You are on page 1/ 4

PROBLEM 1

Principal amount 5,000,000


Direct origination cost 39,400
Loan origination fee -400,000
Carrying amount, 1/1/2020 4,639,400

PV of note @ 11% @ 5 periods


PV of principal (P5,000,000 x 0.5935) 2,967,500
PV of interest (P5,000,000 x 10% x 3.6959) 1,847,950
4,815,450

PV of note at 12% (2)


PV of principal (P5,000,000 x 0.5674) 2,837,000
PV of interest (P5,000,000 x 10% x 3.6048) 1,802,400
4,639,400

PROBLEM 2
Proceeds (P1,000,000 x 0.712) 712,000 711,800
Carrying amount of equipment 800,000 800,000
Loss on sale of equipment -88,000 -88,200 1

Carrying amount of note 712,000


Interest rate 12%
Interest income 85,440.00 2

PROBLEM 3
Accounts receivable, beginning 500,000 Less than 60 days
Credit sales 3,120,000 61-12o days
Collections -3,008,000 121-180 days
Write-off -52,000 Over 180 days
560,000
Additional writeoff -11,200
Accounts receivable, end 548,800 1

A/R, beginning 500,000


Credit sales 3,120,000
Collections -3,008,000
Write-off -52,000
Recovery 2,160
Collection -2,160
560,000 11,200

A/R, beginning 500,000 Less than 60 days


Credit sales 3,120,000 61-12o days
Collections -3,008,000 121-180 days
Write-off -52,000 Over 180 days
Recovery (reestablishment of A/R) 2,160
562,160
Additional write-off 11,243.20
Accounts receivable, 12/31/2020 550,916.8 1

AFDA, beginning 48,000


Writeoff -63,200
Recovery 2,160
Doubtful accounts 64,000 3
AFDA, end 50,960

AFDA, beginning 48,000.00


Writeoff (63,243.20)
Recovery 2,160.00
Doubtful accounts 64,240.00 3
AFDA, end 51,156.56

A/R, end 548,800


AFDA -50,960
Carrying amount of A/R 497,840 4

A/R, end 550,916.80 550,917


AFDA -51,157.00 -51,157
Carrying amount of A/R 499,759.80 499,760
499,760
Date EI (12%) NI (10%) Amortization Carrying Amount
1/1/2020 4,639,400
12/31/2020 556,728 500,000 56,728 4,696,128 1
12/31/2021 563,535 500,000 63,535 4,759,663
12/31/2022 571,160 500,000 71,160 4,830,823
12/31/2023 579,699 500,000 79,699 4,910,522 4
12/31/2024 589,478 500,000 89,478 5,000,000

712,000 711,800
y1 85,440 797,440 797,216
y2 95,692.80 95,693 893,132.80 891,882
y3 106,867.20 4 1,000,000 1,000,000

108,118

560,000 Required allowance


70% 2% 392,000.00 7,840.00
18% 15% 100,800.00 15,120.00
10% 50% 56,000.00 28,000.00
2% 0% 11,200.00
560,000.00 50,960.00 2
562,160 Required allowance
Less than 60 days 70% 2% 393,512.00 7,870.24
61-12o days 18% 15% 101,188.80 15,178.32
121-180 days 10% 50% 56,216.00 28,108.00
Over 180 days 2% 0% 11,243.20
562,160.00 51,156.56 2

51,1

You might also like