Problem 1

Number of days outstanding Amount Uncollectibility Total

0-30 5,000,000 3% 150,000
31-60 2,000,000 6% 120,000
61-90 1,000,000 15% 150,000
Over 90 200,000 30% 60,000
1. Allowance for doubtful accounts, 12/31/23 480,000

Allowance for doubtful accounts, 1/1/23 520,000

Recovery of accounts written off 750,000
Accounts written off (1,250,000)
Allwaonce for doubtful accounts before adjustments 20,000

Allowance for doubtful accounts before adjustments 20,000

Allowance for doubtful accounts as adjusted (480,000)
2. Depreciation Expense, 2023 (460,000)

0-30 5,000,000
31-60 2,000,000
61-90 1,000,000
Over 90 200,000
Accounts Receivable, 12/31 8,200,000
Allowance for doubtful accounts (480,000)
3. Accounts Receivable, net 7,720,000

Problem 2
Face Value of Note 2,000,000
PVOA @ 10% 2.4869
1. Initial Measurement 4,973,800

Selling Price 4,973,800

Carrying Value (10M-4.5M) (5,500,000)
2. Loss on Sale (526,200)

3. Journal Entry
Note Receivable 6,000,000
Accumulated Depreciation 4,500,000
Loss on Sale 526,200
Discount on Notes Receivable 1,026,200
Equipment 10,000,000

Date Annual Collection Interest Income Collection applied Carrying Value

to Principal
1/1/2022 4,973,800
12/31/2022 2,000,000 497,380 1,502,620 3,471,180
12/31/2023 2,000,000 347,118 1,652,882 1,818,298
12/31/2024 2,000,000 181,702 1,818,298 -

Problem 3
Principal - PV of 1 (500,000 x 0.6209) 310,450
Interest - PVOA (500k x 12% x 3.7908) 227,448
1. Initial Measurement, 1/1/22 537,898

Selling Price 537,898

Cost (1M - 500k) (500,000)
2. Gain on Sale 37,898

Date Interest received Interest income Amortization Carrying Value

1/1/2022 537,898
12/31/2022 60,000 53,790 6,210 531,688
12/31/2023 60,000 53,169 6,831 524,857
12/31/2024 60,000 52,486 7,514 517,342
12/31/2025 60,000 51,734 8,266 509,076
12/31/2026 60,000 50,924 9,076 500,000

Problem 4.
Principal 4,000,000
Interest (4M x 10% x 9/12) 300,000
Maturity value 4,300,000
Discount (4.3M x 12% x 6/12) (258,000)
1. Proceeds from discounting 4,042,000
Carrying value of the note:
Principal 4,000,000
Interest as of 4/1 (4M x 10% x 3/12) 100,000 4,100,000
2. Interest Expense (58,000)

Maturity Value 4,300,000

Protest Fee 15,000
Total 4,315,000
Interest (4.315M x 10% x 3/12) 107,875
3. Amount collected from customer 4,422,875