Roth Company received from a customer a one-year, P500,000 note bearing annual interest interest of 8%. fter holding holding the note for si! months, Roth discounted discounted the note at Regional "an# at an effective interest rate of $0% $. hat amount of cash did Roth receive from the ban#& a. 5'0,000 b. 5(),8$0 c. 5$),000 d. '*5,()8 +n uly $, (00, ee Company sold goods in e!change for P(,000,000, 8 / month, noninter noninterest-bea est-bearing ring note receivable. receivable. t the time of the sale, the notes mar#et rate of interest 1as $(%. (. hat hat am amoun ountt did did ee ee rece receiv ive e 1hen 1hen it disc discou ount nted ed the the note note at $0% $0% on 2eptember $, (00& a. $,*'0,000 b. $,*)8,000 c. $,*00,000 d. $,880,000 pe! Company accepted from a customer P$,000,000 face amount, -month, 8% note date pril pril $5, (00. +n the same date date pe! discounted discounted the note at 3nion "an# at a $0% discount disco unt rate. ). 4o1 much cash should pe! receive from the ban# on pril $5, (00& a. $,0'0,000 b. **0,000 c. *88,000 d. *(,000 +n une une )0, )0, (00 (00,, Ray Ray Comp Compan any y disc discou ount nted ed at the the ban# ban# a cust custom omer ers s P,000, P,000,000 000,, -month -month,, $0% note note receiv receivabl able e dated dated pril pril )0, (00. (00. 6he ban# discounted the note at $(%. '. Rays proceeds from this discounted disco unted note amounted to a. 5,'0,000 b. 5,0,000 c. ,0'8,000 d. ,$',000 +n uly uly $, (005, (005, 7ay Corporat Corporation ion sold euipm euipment ent to 9ando 9ando Compan Company y for P$,000,000. 7ay accepted a $0% note note receivable for the entire sales price. 6his note is payable payable in t1o eual installments installments of P500,000 plus accrued accrued interest on :ecember )$, (005 and :ecember )$, (00. +n uly $, (00, 7ay discounted the note at a ban# at an interest rate o f $(% 5. 7ays proceeds from the discounted note 1ere a. '8',000 b. '*),500 c. 50),500 d. 5$,000 Rand Company accepted from a customer a P',000,000, *0-day $(% interest bearing note dated ugust )$, (00. +n 2eptember )0, (00, Rand discounted the note note at the pe! 2tate 2tate "an# at $5%. 4o1eve 4o1ever, r, the procee proceeds ds 1ere not received until +ctober $, (00. . ;n the 2eptember )0,(00 balance sheet, the amount of receivable from the ban# based on a )0-day year, includes accrued interest revenue of a. $,000 b. (0,000 c. )0,000 d. '0,000

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:ecember :ecember )$, (00 1as 8%. 6he compound compound interest interest factors to convert convert future future value into present value at 8% follo1A Present value of $ due in nine months . *'' Present value of $ due in five years . 80 $(. t 1hat amounts should these t1o notes receivable be reported in ets :ecember )$, (00 balance sheet& 4art 9a!! a. *'',000 80,000 b. *5,(00 8(,000 c. $,000,000 80,000 d. $,000,000 8(,000 +n anuary anuary $, (00 +tt Company Company sold goods to ?o! Company. Company. ?o! signed signed a noninteres noninterest-beari t-bearing ng note reuiring payment of P00,000 P00,000 annually annually for seven years. 6he first payment 1as made on anuary $, (00. 6he prevailing rate of intere interest st for this type type of note at date of issuance issuance 1as $0%. $0%. ;nform ;nformati ation on on present value factors is as follo1sA Period Present value of $ at Present value of ordinary $0% annuity of $ at $0% . 5 '.) . 5$ '.8 $). +tt should record sales revenue in anuary (00 of a. ),($,000 b. (,*((,000 c. (,$,000 d. (,$'(,000 Re! Company accepted a P$,000,000, (% interest bearing note from "roo#s Company on :ecember )$, (00, in e!change for a machine 1ith a list price of P800,000 P800,000 and a cash price of P50,000. P50,000. 6he note is payable payable on :ecember :ecember )$, (008. $'. ;n its (00 income statement, Re! should report the sale at a. 50,000 b. 800,000 c. $,000,000 d. $,0'0,000 +n :ecember )$, (00, Par# Company sold used euipment and received a noninterest-bearing note reuiring payment of P500,000 annually for ten years. 6he first payment is due :ecember )$, (00 and a nd the prevailing rate of interest for this type type of note at date of issuance issuance is $(%. $(%. Present Present value factors factors are as follo1sA Present value of $ at $(% for $0 periods 0.)(( Present value of ordinary annuity of $ at $(% for $0 periods 5.50 $5. ;n its :ecember )$, (00 balance sheet, Par# should report the carrying amount of the note at a. $,$0,000 b. (,$5,000 c. (,8(5,000 d. 5,000,000

On December 30, 2006, Chang Company sold a machine machine to Door Company in exchange for a noninterest bearing note requiring requiring ten annual payments of P00,000! Door made the first payment on December 30, 2006! "he mar#et interest rate for similar notes at date date of issuance $as %&! 'nformation on present present (alue factors is) Present value Present value of ordinary

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a. '50,000 b. '0,000 c. (5,000 d. $,000 +n anuary (, (00, Bmme Company sold euipment 1ith a carrying carrying amount of P',800 P',800,000 ,000 in e!chang e!change e for a P,000, P,000,000 000 nonint nonintere erest st bearin bearing g note note due anuary (, (00*. 6here 1as no established e!change price for the euipment. 6he prevailing rate of interest for a note of this type on anuary (, (00, 1as $0%. 6he present value of $ at $0% for three periods is 0.5 $. ;n Bmmes (00 income statement, 1hat amount should be reported as interest income& a. *0,000 b. '50,000 c. 500,000 d. 00,000 $8. ;n Bmmes (00 income statement, 1hat amount should be reported as gain or loss on sale of euipment& a. )00,000 loss b. )00,000 gain c. $,(00,000 gain d. (,00,000 gain +n anua anuarry $, (00 (00,, 9ill ill Comp Compan any y sold sold a buil buildi ding ng and and recei eceive ved d as consideration P$,000,000 cash and a P',000,000 noninterest bearing note due on anuary $, (00*. 6here 1as no no established e!change price for the building, and the note had no ready ready mar#et. 6he prevailing prevailing rate of interest interest for a note of this type at anuary $, (00, 1as $0%. 6he present value of $ at at $0% for three periods is 0.5. $*. hat amount of interest interest revenue should be included in 9ills (00 income statement& a. )0,000 b. '00,000 c. )00,000 d. ))0,000 Pasadeas Company sold some machinery to the Rodac Company on anuary $, (005, for 1hich 1hich the cash selling selling price 1as P,58(,00 P,58(,000. 0. Rodac entered entered into into an installment installment sales sales contract contract 1ith Pasadea Pasadea at an interest interest rate of $0%. 6he contract reuired payments of P(,000,000 a year over five years 1ith the first payment due on :ecember )$, (005. (0. hat amount of interest income, if any, should be included in Pasadeas (00 income statement using the Dinterest methodE& a. $,000,000 b. )',0(0 c. 58,(00 d. 0 ppari "an# granted a loan to a borro1er on anuary $, (00. 6he interest rate on the loan is $0% payable payable annually annually starting starting :ecembe :ecemberr )$, (00. 6he loan matures in five years on :ecember )$, (0$0. Principal amount ',000,000 :irect origination cost $,500 +rigination fee received from borro1er )50,000 6he effective rate on the loan after considering the direct origination cost and

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d. ),$$,500 ((. hat is the interest income for (00& a. '00,000 b. 558,000 c. 5(*,)80 d. ''5,)80

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:ecember )$, (008 :ecember )$, (00* :ecember )$, (0$0 6he present value of $ at $$% is as follo1sA ?or one period ?or t1o period ?or three period ?or four period

$,000,000 (,000,000 ',000,000 0.*0 0.8$ 0.) 0.

(. 4o1 much is the loan impairment loss on :ecember )$, (00& a. (,*5,000 b. (,('0,000 c. 5,)0,000 d. (,$'0,000 (8. hat is the interest income to be reported by "us1ang "each "an# in (00& a. 58*,00 b. 5)',00 c. 8(5,000 d. 5**,'5

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