The following Receivables as of December 31, 2021 were taken from the books of Gandia Company.

Trade Installment receivable due in 18 Months, including unearned interest of P15,000. 725,000.00
Receivables from officers 200,000.00 Non trade
Claims against shipping company, due in 15 months 120,000.00 Non trade
Past due trade accounts receivables 600,000.00
Customer's NSF check returned by bank 80,000.00
Advances to employees 25,000.00 Non trade
Receivable from customer arising from sale of goods 750,000.00
Interest receivable on bonds 150,000.00 Non trade
Interest receivable on notes 45,000.00 Non trade
Other trade accounts receivable - Unassigned 240,000.00
Subscription receivable for Ordinary shares due in 24 months 1,000,000.00 Non trade
Trade Accounts receivable - Assigned 550,000.00
Trade Accounts on which post dated check is held 290,000.00
Deposit made by customer for warehouse rent for 2 years 140,000.00 Liablity
Trade acounts known to be worthless 30,000.00 Liablity

How Much is trade receivables to be reported on the December 31, 2021 financial statements?

Trade Installment receivable due in 18 Months, including unearned interest of P15,000. 710,000.00 Unearned interest excluded
Past due trade accounts receivables 600,000.00
Customer's NSF check returned by bank 80,000.00
Receivable from customer arising from sale of goods 750,000.00
Other trade accounts receivable - Unassigned 240,000.00
Trade Accounts receivable - Assigned 550,000.00
Trade Accounts on which post dated check is held 290,000.00
3,220,000.00
Assume that Gandia's policy estimates that 5% of the outstanding balance of trade receivable is
Uncollectible, a beginning in allowance for bad debts of P56,500 and a total provision of P102,000. How
Much is bad debts expense for 2021?
ADA
30,000.00 56,500.00
Allowance for bad debts for the year 134,500.00

Outstanding P3,220,000 * 5% ECL 161,000.00

Net Realizable Value of Receivables 3,059,000.00

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On january 1, 2021, Boss Company's accounts receivable has an outstanding balance of P500,000. Below
are the transactions during 2021:

Total sales including cash sales of P500,000 8,000,000.00

Accounts Receivable written off 60,000.00
Total Sales return, of which P30,000 pertains to sales made on a cash basis. 80,000.00
Amount received from credit customers 5,100,000.00
Sales discount and allowances granted. 70,000.00
Amounts received representing recovery, not included in the P5,100,000 above 120,000.00

What is the amortized cost of the accounts receivable on December 31, 2021, assuming that the 2,584,000.00
Company's policy is to provide 5% allowance based on the outstanding balance?

A/R
A 500,000.00 60,000.00 B
C 7,500,000.00 50,000.00 D
E 120,000.00 5,170,000.00 F
120,000.00 G

2,720,000.00

ADA
I 60,000.00 25,000.00 H
120,000.00 J
Allowance for bad debts for the year 51,000.00 I

Outstanding P3,220,000 * 5% ECL 136,000.00 K

*A Beginning AR
*B AR written off
*C Sales excluding Cash Sales
*D Sales return for credit sales
*E amount received not included in amount received in credit customers
*F Amount received recovery from credit customers + SR&A
*G Amount received recovery from credit customers
*H beginning balance AR * 5% P500,000 * .05 = 25,000
*I AR written off
*J Amount received recovery from credit customers (ADA)
*I Bad debts expense for the year
*K Outstanding balance A/R * 5%

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Leon Company has an accounts receivable balance of P500,000 and Allowance for Bad dbts of P48,000
as of December 31, 2020. Below are transacions recorded by the company in 2021:

Credit sales during the year 3,120,000.00

Total Accounts collected from customers during the year 3,020,160.00
Accounts written off as uncollectible 42,000.00
Recoveries from accounts written of in the prvious year 2,160.00

An aging of accounts receivable on December 31, 2021 is shown below:

Age group % A/R TOTAL Probability of Collection
Less than 60 Days 60% 99%
Between 61 and 120 Days 22% 88%
Between 121 and 180 Days 15% 45%
Over 180 Days 3% 20%

The adjusted balance of gross accounts receivable is? 560,000.00

The balance of allowance for bad debts as of December 31, 2021 is? 77,784.00
Bad debts expense for the year 2021 is? 69,624.00

A/R
500,000.00 3,020,160.00
3,120,000.00 42,000.00
2,160.00

560,000.00

ADA
42,000.00 48,000.00
2,160.00
Allowance for bad debts for the year 69,624.00

Required allowance as per aging 77,784.00

An aging of accounts receivable on December 31, 2021 is shown below:

Age group % A/R TOTAL Probability of UnCollection Uncollectible
Less than 60 Days 336,000.00 1% 3,360.00
Between 61 and 120 Days 123,200.00 12% 14,784.00
Between 121 and 180 Days 84,000.00 55% 46,200.00
Over 180 Days 16,800.00 80% 13,440.00
Total 560,000.00 77,784.00

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 Cash Credit Total
Cost of Sales 500,000.00 4,500,000.00 5,000,000.00
Cash Received from customers 650,000.00 5,850,000.00 6,500,000.00

Inventories were marked to sell as follows: Cash Sales, 30% above cost and credit sales at 40% above cost all of which are deemed collectible.

The Balance of accounts receivable at the end of the year was? 450,000.00

At Cost Mark up Selling price

100% 40% 140%
Cost of Sales 4,500,000.00 1,800,000.00 6,300,000.00

A/R
Selling price is 40% above cost 6,300,000.00
Cash Received from customers 5,850,000.00

450,000.00

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On january 1, 2021, EX Company sold its equipment with an original cost of P1,000,000 and an accumulated depreciation of P400,000 and received a cash of P200,000
and a 4 year, 3%, P500,000 note to be collected on December 31, 2024. Interest is to be collected at the end of each year. Effective interest on the note on this date is 5%.

How much is the gain or (loss) on sale of the equipment? 64,540.49

How much is the interest income for the period ended December 31, 2022? 23,638.38

Cost of Equipment 1,000,000.00

Accumulated Depreciation 400,000.00
Carrying Value of Equipment 600,000.00

Principal 500,000.00
Interest 15,000.00
Term 4.00
Nominal Rate 3%
Effective Rate 5%
Down Payment 200,000.00
PV of 1 Factor
105%
0.82

PV of OA 105%
3.545950504

PV of 1 411351.2374
PV of OA 53,189.26
Present Value of Future Cash Flows 464,540.49
Down Payment 200,000.00
FMV of Consideration Given UP 664,540.49
less CV of Equipment 600,000.00
Gain on Sale of Equipment 64,540.49

Year Nominal rate Effective Rate Balance

3% 5%
Jan-21 464,540.49
Dec-21 15,000.00 23,227.02 472,767.52
Dec-22 15,000.00 23,638.38 481,405.90
Dec-23 15,000.00 24,070.29 490,476.19
Dec-24 15,000.00 24,523.81 500,000.00

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Wise Inc sold its building on August 1, 2020. The buidling has an estimated useful life of 5 years with an original cost of P15,000,000 and a carrying Value of P9,500,000
at the date of sale. Wise received a P6,000,000, 3 year non interest bearing note to be collected in equal annual installment of P2,000,000 every July 31 of each year starting 2021
There is no available fair value for the building but on August 1, 2020, effective interest for similar note was at 6%. On December 31, 2021, the effective interest increased to 7%.

How much is the interest income for the perdiod ended December 31, 2021? 278,780.47
How much is the current portion of the Note receivable as of December 31, 2021? 1,824,492.70

Cost of Equipment 15,000,000.00

Accumulated Depreciation 5,500,000.00
Carrying Value of Equipment 9,500,000.00

Serial Payment 2,000,000.00

Interest -
Term 3.00
Nominal Rate 0%
Effective Rate 6%
Down Payment -
PV of 1 Factor

PV of OA 106%
2.673011949

PV of 1 0
PV of OA 5,346,023.90
Present Value of Future Cash Flows 5,346,023.90
Down Payment -
FMV of Consideration Given UP 5,346,023.90
less CV of Equipment 9,500,000.00
Loss on Sale of Equipment - 4,153,976.10

Year Serial Payment Effective Rate Allocated Balance Interest income Current Portion
6%
August 1 2020 5,346,023.90
December 31 2020 133,650.60 5,479,674.50 1,721,219.53
August 1 2021 2,000,000.00 320,761.43 187,110.84 3,666,785.33
December 31 2021 91,669.63 3,758,454.97 278,780.47 1,824,492.70
August 1 2022 2,000,000.00 220,007.12 128,337.49 1,886,792.45
December 31 2022 47,169.81 1,933,962.26 175,507.30 1,924,528.30
August 1 2023 2,000,000.00 113,207.55 75,471.70 9,433.96 75,471.70

Year Serial Payment Effective Rate Allocated Balance Interest income Current Portion
6%
August 1 2020 5,346,023.90
December 31 2020 133,650.60 133,650.60 5,479,674.50 1,688,341.48
August 1 2021 2,000,000.00 219,186.98 219,186.98 3,698,861.48
December 31 2021 92,471.54 92,471.54 3,791,333.01 311,658.52 1,799,772.02
August 1 2022 2,000,000.00 151,653.32 151,653.32 1,942,986.33
December 31 2022 48,574.66 48,574.66 1,991,560.99 200,227.98 1,920,337.56
August 1 2023 2,000,000.00 79,662.44 79,662.44 71,223.43 79,662.44

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On january 1, 2021, Arc Company received a 10%, P14,000,000 note, collectible in installment plus interest every December 31, each year until December 31, 2025. The note is to be collected as follows
The effective interest rate on Jan 1, 2021 and December 31, 2021 were 14% and 15% respectively
December 31 2021 4,000,000.00
December 31 2022 3,500,000.00
December 31 2023 3,000,000.00
December 31 2024 2,500,000.00
December 31 2025 1,000,000.00
Total 14,000,000.00

How much is the present value of the note at Jan 1, 2021? 12,921,826.34
How much is the carrying value of the note at December 31, 2021? 9,330,882.03
How much of the carrying value of the note receivable is reported as Non- Current as of December 31, 2022? 3,346,414.28 1

14% 10%
PV Factor at 14% Interest Collections Balance PV of PCF
December 31 2021 4,000,000.00 0.877192982 1,400,000.00 5,400,000.00 10,000,000.00 4,736,842.11
December 31 2022 3,500,000.00 0.769467528 1,000,000.00 4,500,000.00 6,500,000.00 3,462,603.88
December 31 2023 3,000,000.00 0.674971516 650,000.00 3,650,000.00 3,500,000.00 2,463,646.03
December 31 2024 2,500,000.00 0.592080277 350,000.00 2,850,000.00 1,000,000.00 1,687,428.79
December 31 2025 1,000,000.00 0.519368664 100,000.00 1,100,000.00 - 571,305.53
Total 14,000,000.00 3,500,000.00 12,921,826.34

Year Interest Effective Rate Current Portion Non-Current Portion Balance

10% 14%
Jan-21 12,921,826.34
Dec-21 1,400,000.00 1,809,055.69 5,400,000.00 9,330,882.03 13,330,882.03 14,730,882.03
Dec-22 1,000,000.00 1,306,323.48 4,500,000.00 6,137,205.51 13,637,205.51 10,637,205.51
Dec-23 650,000.00 859,208.77 3,650,000.00 3,346,414.28 13,846,414.28 6,996,414.28
Dec-24 350,000.00 468,498.00 2,850,000.00 964,912.28 13,964,912.28 3,814,912.28
Dec-25 100,000.00 135,087.72 1,100,000.00 - 14,000,000.00 1,100,000.00

On October 31, 2021, Ingrid Corp. had the following transactions.

Obtain a P500,000, 6 month loan from Citi Bank, discounted at 12%. The company pledge P600,000 of its accounts receivable as a security for the loan.
Factored P1,000,000 of accounts receivable without recourse on a notification basis with Nice Finance Company. Nice Finance charged a factoring fee of 5% of the amount
of the receivable factored and withheld 10% of the receivable factored

What is the amount of cash received from the financing of the receivables and what amount of loss recognized respectively?
Cash Received 1,320,000.00
Loss 50,000.00

Cash 470,000.00
Interest expense 30,000.00
Loans Payable 500,000.00

Cash 850,000.00
Factors Holdback 100,000.00
Loss on Factoring 50,000.00
Loans Payable 1,000,000.00

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On April 1, 2021, Lunar Company loaned P20,000,000 to Eclipse Company. The Loan is to be repayable after 5 years. Interest on this loan is 3% annually every april 1 of each year starting 2022. Direct origination cost
of P478,991 was paid by Lunar and direct origination fee was deducted from the proceeds received by Eclipse Company. The effective interest on this loan is 5% after the origination cost and fees.

How much is the direct origination fee? 2,210,781.67

How much interest income is recognized on its 2022 income statement? 925,163.36
What was the carrying value of the loan on December 31, 2022? 18,828,430.54

Face Value 20,000,000.00

Direct origination cost 478,991.00
(Direct origination fee) 2,210,781.67
Net Cash/Consideration given up 18,268,209.33

Principal 20,000,000.00
Interest 600,000.00
Term 5.00
Nominal Rate 3%
Effective Rate 5%
Down Payment -
PV of 1 Factor
105%
0.78

PV of OA 105%
4.329476671

PV of 1 15670523.33
PV of OA 2,597,686.00
Present Value of Future Cash Flows 18,268,209.33
Down Payment -
FMV of Consideration Given UP 18,268,209.33

Year Interest Payment Payment Effective Rate Allocated Balance Interest income Current Portion
5%
April 1, 2021 - 18,268,209.33
December 31 2021 - 685,057.85 18,953,267.18
April 1, 2022 600,000.00 913,410.47 228,352.62 18,581,619.80 313,410.47
December 31 2022 450,000.00 696,810.74 18,828,430.54 925,163.36
April 1, 2023 150,000.00 929,080.99 232,270.25 18,910,700.79 779,080.99
December 31 2023 450,000.00 709,151.28 19,169,852.07 941,421.53
April 1, 2024 150,000.00 945,535.04 236,383.76 19,256,235.83 795,535.04
December 31 2024 450,000.00 722,108.84 19,528,344.67 958,492.60
April 1, 2025 150,000.00 962,811.79 240,702.95 19,619,047.62 812,811.79
December 31 2024 450,000.00 735,714.29 19,904,761.90 976,417.23
April 1, 2026 150,000.00 980,952.38 245,238.10 20,000,000.00 830,952.38

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