Ateneo de Zamboanga University

School of Management and Accountancy

Accounting 240
ASSIGNEMENT_2nd
1. On July 1, 2015, Maclloyd Company issued a P4,000,000 note payable for
money borrowed from Izra, Inc. The one-year, P4,000,000 note payable was
discounted at 12% and is payable in lump sum on June 30, 2016. How much
is the carrying amount of the note on initial recording?
Ans.
2. On October 1, 2015, Nanely Company acquired land by issuing a two-year,
12%, P4,000,000 note payable. Principal is due on October 31, 2017 but
interests are due annually every October 1. Nanely uses the calendar year as
its accounting period. How much is the interest expense recognized in 2015?
Ans.
3. On January 1, 2015, Pearly Company purchased inventory with a list price of
P4,400,000 and a cash price of P4,000,000 by issuing a noninterest-bearing
note of P4,800,000 due on December 31, 2017. How much is the carrying
amount of the note on initial recognition?
Ans.
4. Using the same information in number 3 above, how much is the interest
expense in 2015?
Ans.
5. Using the same information in number 3 above, how much is the carrying
amount of the note on December 31, 2015?
Ans.
6. Joanna Company offered a contest in which the winner would receive
P1,000,000, payable over 20 years. On December 31, 2015 Joanna
announced the winner of the contest and signed a note payable to the winner
for P1,000,000, payable in P50,000 installments every January 2. Also on
December 31, 2015, Joanna purchased an annuity for P418,250 to provide
the P950,000 prize monies remaining after the first P50,000 installment,
which was paid on January 2, 2016. In its December 31, 2015 balance sheet,
what amount should Joanna report as note payable-contest winner, net of
current portion?
Ans.
7. Using the same information in number 6 above, what should Joanna report as
contest prize expense in its 2015 income statement?
Ans.
8. On December 1, 2015, Habbi Company gave Shiendra Company a P200,000,
11% loan. Habbi paid proceeds of P194,000 after the deduction of a P6,000
nonrefundable loan origination fee. Principal and interest are due in 60
monthly installments pf P4,310, beginning January 1, 2016. The repayments
yield an effective interest rate of 11% at a present value of P200,000 and
12.4% at a present value of P194,000. What amount of income from this loan
should Habbi report in itsb2015 income statement?

Ans.