BV Company accepted from a customer P1,000,000 face amount, 6-month, 8% note dated April 15,

2018. On the same

date, the company discounted the note without recourse at a 10% discount rate.

1. What amount of cash was received from the discounting?

Principal 1,000,000

Add: Interest ( 1,000,000*8%*6/12) 40,000

Matiurity value 1,040,000

Less: Discount ( 1,040,000*10%*6/12) 52,000

Amount of cash was received from the discounting ( Net Proceeds ) 988,000

2. What is the loss on note receivable discounting?

Net Proceeds 988,000

Less: Carrying amount of note receivable 1,000,000

Loss on note receivable discounting (12,000)