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  • Interest Bearing Note Problems

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    PATRICIA ALVAREZ
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    The document describes 4 cases of interest bearing promissory notes received by ABC Company. Case 1 involves a lump sum note for $500,000 due in 2024 with annual interest payments. Case 2 is also a lump sum note but for $500,000 due in 2025. Case 3 and 4 involve installment notes of $1,500,000 paid over 3 years with annual interest and principal. The cases provide details to calculate interest income for years 2022-2024 and assets to report as of December 31, 2022 and 2024.

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    Interest-bearing-note-problems

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    The document describes 4 cases of interest bearing promissory notes received by ABC Company. Case 1 involves a lump sum note for $500,000 due in 2024 with annual interest payments. Case 2 is also a lump sum note but for $500,000 due in 2025. Case 3 and 4 involve installment notes of $1,500,000 paid over 3 years with annual interest and principal. The cases provide details to calculate interest income for years 2022-2024 and assets to report as of December 31, 2022 and 2024.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    5 views2 pages

    Interest Bearing Note Problems

    Uploaded by

    PATRICIA ALVAREZ
    The document describes 4 cases of interest bearing promissory notes received by ABC Company. Case 1 involves a lump sum note for $500,000 due in 2024 with annual interest payments. Case 2 is also a lump sum note but for $500,000 due in 2025. Case 3 and 4 involve installment notes of $1,500,000 paid over 3 years with annual interest and principal. The cases provide details to calculate interest income for years 2022-2024 and assets to report as of December 31, 2022 and 2024.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 2

    CASE 1 : INTEREST BEARING NOTE - LUMP-SUM

    ABC Company received a 10% promissory note on January 1, 2022 with a face amount of P500,000. The
    principal amount of this note is due to be collected on December 31, 2024 while the interest on the note
    is due annually every December 31 starting December 31,2022. The market rate of interest of this kind
    of note is 10%.

    Requirement :

    1. Journalize the transaction

    CASE 2 : INTEREST BEARING NOTE - LUMP-SUM

    ABC Company received a 10% promissory note on July 1 , 2022 with a face amount of P500,000. The
    principal amount of this note is due to be collected on June 30 , 2025 while the interest on the note is
    due annually every June 30 starting June 30, 2023. The market rate of interest of this kind of note is
    10%.

    Requirement :

    1. Journalize the transactions


    2. How much is the interest income to be reported in 2022 ?
    3. How much is the interest income to be reported in 2023 ?
    4. How much should be reported as current assets in relation to the note as of December 31, 2022 ?
    5. How much should be reported as current assets in relation to the note as of December 31, 2024 ?
    CASE 3 : INTEREST BEARING NOTE - INSTALLMENT

    ABC Company has a 10% note receivable dated January 1, 2022 , in the original amount of P1,500,000.
    Payments of P500,000 in principal plus accrued interest are due annually on December 31, 2022, 2023
    and 2024. The market rate of this interest of this kind of note is 10%

    1. How much is the interest income for the year 2022 ?


    2 How much is the interest income for the year 2023 ?
    3. How much is the interest income for the year 2024 ?
    4. How much should be reported as current assets in relation to the note as of December 31, 2022 ?
    5. How much should be reported as non-current assets in relation to the note as of December 31, 2022 ?

    CASE 4 : INTEREST BEARING NOTE - INSTALLMENT

    ABC Company has a 10% note receivable dated July 1, 2022 , in the original amount of P1,500,000.
    Payments of P500,000 in principal plus accrued interest are due annually on June 30, 2023, 2024 and
    2025. The market rate of this interest of this kind of note is 10%

    1. How much is the interest income for the year 2022 ?


    2 How much is the interest income for the year 2023 ?
    3. How much is the interest income for the year 2024 ?
    4. How much should be reported as current assets in relation to the note as of December 31, 2022 ?
    5. How much should be reported as non-current assets in relation to the note as of December 31, 2022 ?

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