Problem 6-1
Principal 500,000.00
Annual Interest (P 500,000 x 12%) 60,000.00
December 1, Interest (P 60,000 / 12) 5,000.00
January 1, Interest (P 60,000 / 12) 5,000.00
Accrued Interest Receivable, December 31, 2024 10,000.00
Problem 6-2
Original Amount 1,500,000.00
Less: Payment on July 1, 2025 500,000.00
Balance on July 1, 2025 1,000,000.00
Principal 1,000,000.00
Annual Interest for Year Ended June 30, 2026 80,000.00
Problem 6-3
First Note - Principal 1,000,000.00
PV of the First Note (P 1,000,000 x 0.944) 944,000.00
Unearned Interest Income 56,000.00
Notes Receivable 1,000,000.00
Service Revenue
Unearned Interest Income
Second Note - Principal 1,000,000.00
PV of the Second Note (P 1,000,000 x 0.857) 857,000.00
Unearned Interest Income 143,000.00
Notes Receivable 1,000,000.00
Service Revenue
Unearned Interest Income
Carrying amount of Notes Receivable, 12/31/24 (P 944,000 + 857,000)
Problem 6-4
9%
Date Payment Interest Inc. Principal Repay
Jan. 1, 2025
Dec. 31, 2025 500,900.00 175,365.00 325,535.00
Dec. 31, 2026 500,900.00 146,066.85 354,833.15
Dec. 31, 2027 500,900.00 114,131.87 386,768.13
Dec. 31, 2028 500,900.00 79,322.73 421,577.27
Dec. 31, 2029 500,900.00 41,113.55 459,786.45
556,000.00
Dec. 31, 2025 Cash 500,900.00
Notes Receivable
Interest Income
Dec. 31, 2026 Cash 500,900.00
Notes Receivable
Interest Income
Dec. 31, 2027 Cash 500,900.00
Notes Receivable
Interest Income
Dec. 31, 2028 Cash 500,900.00
Notes Receivable
Interest Income
Dec. 31, 2029 Cash 500,900.00
Notes Receivable
Interest Income
Problem 6-5
1,000,000 Note
Oct. 31, 2025 Cash
Notes Receivable
Interest Income (P 1,000,000 x 6% x 10/12)
Interest Receivable (P 1,000,000 x 6% x 2/12)
3,000,000 Note
Mar. 31, 2025 Cash
Notes Receivable
Interest Income (P 3,000,000 x 8% x 3/12)
Interest Receivable (P 3,000,000 x 8% x 9/12)
Credit Sales
Accounts Receivable
Sales
Cash
Accounts Receivable
Allowance for Doubful Accounts
Accounts Receivable
Accounts Receivable
5,100,000.00 18,000,000.00
21,000,000.00 600,000.00
7,500,000.00
Required balance for Allowance for Doubtful Accounts (P 7,500,000 x 10%)
Doubtful Accounts Expense
Allowance for Doubtful Accounts
1. What amount should be reported as interest income for 2025? (P 50,000 + 60,000)
2. What amount should be reported as doubtful accounts expense for 2025?
Problem 6-6
Face value of the notes receivable (P 500,000 x 10)
PV of the note receivable (P 500,000 x 5.65)
Unearned Interest Income
Dec. 31, 2024 Notes Receivable
Equipment, Net
Unearned Interest Income
Gain on Sale of Equipment
12%
Date Payment Interest Income Prin. Repayment
Dec. 31, 2024
Dec. 31, 2025 500,000.00 339,000.00 161,000.00
Dec. 31, 2026 500,000.00 319,680.00 180,320.00
Dec. 31, 2027 500,000.00 298,041.60 201,958.40
Dec. 31, 2028 500,000.00 273,806.59 226,193.41
Dec. 31, 2029 500,000.00 246,663.38 253,336.62
Dec. 31, 2030 500,000.00 216,262.99 283,737.01
Dec. 31, 2031 500,000.00 182,214.55 317,785.45
Dec. 31, 2032 500,000.00 144,080.29 355,919.71
Dec. 31, 2033 500,000.00 101,369.93 398,630.07
Dec. 31, 2034 500,000.00 53,880.67 446,119.33
Dec. 31, 2025 Cash
Unearned Interest Income
Interest Income
Notes Receivable
1. What is the carrying amount of the notes receivable on December 31, 2024?
2. What amount should be recognized as gain on sale of equipment in 2024?
3. What amount of interest income should be recognized for 2025?
4. What is the carrying amount of the notes receivable on December 31, 2025?
Problem 6-9
PV of the notes receivable (P 600,000 x 4.36)
10%
Date Payment Interest Inc.
Jan. 1, 2024 600,000.00 261,600.00
Jan. 1, 2025 600,000.00 227,760.00
Jan. 1, 2026 600,000.00 190,536.00
Jan. 1, 2027 600,000.00 149,589.60
Jan. 1, 2028 600,000.00 104,548.56
Jan. 1, 2029 600,000.00 49,965.84
1. What amount should be recorded as sales revenue for January?
2. What amount should be reported as interest income for 2024?
944,000.00
56,000.00
857,000.00
143,000.00
1,801,000.00
Carrying Amount
1,948,500.00
1,622,965.00
1,268,131.85
881,363.72
459,786.45
-
325,535.00
175,365.00
354,833.15
146,066.85
386,768.13
114,131.87
421,577.27
79,322.73
459,786.45
41,113.55
1,060,000.00
1,000,000.00
0 x 6% x 10/12) 50,000.00
0,000 x 6% x 2/12) 10,000.00
3,000,000.00
0 x 8% x 3/12) 60,000.00
0,000 x 8% x 9/12) 180,000.00
21,000,000.00
21,000,000.00
18,000,000.00
18,000,000.00
600,000.00
600,000.00
Allowance for Doubtful Accounts
600,000.00 500,000.00
850,000.00
750,000.00
00 x 10%) 750,000.00
850,000.00
850,000.00
(P 50,000 + 60,000) 110,000.00
e for 2025? 850,000.00
5,000,000.00
2,825,000.00
2,175,000.00
5,000,000.00
2,000,000.00
2,175,000.00
825,000.00
Carrying Amount
2,825,000.00
2,664,000.00
2,483,680.00
2,281,721.60
2,055,528.19
1,802,191.58
1,518,454.56
1,200,669.11
844,749.41
446,119.33
-
500,000.00
339,000.00
339,000.00
500,000.00
ber 31, 2024? 2,825,000.00
nt in 2024? 825,000.00
339,000.00
ber 31, 2025? 2,664,000.00
2,616,000.00
Principal Rep. Carrying Amount
2,616,000.00
338,400.00 2,277,600.00
372,240.00 1,905,360.00
409,464.00 1,495,896.00
450,410.40 1,045,485.60
495,451.44 550,034.16
550,034.16 -
2,616,000.00
261,600.00
