9. Sta. Ana Corporation has P3,000,000 note receivable from sale of plant bearing interest at 12% per annum. The note is dated June 1, 2008. The note is payable in three annual installments of P1,000,000 plus interest on the unpaid balance every June 1. The initial principal and interest payment was made on June 1, 2009. What is the interest income for 2009?

a. P140,000

b. P210,000

c. P290,000

d. P300,000

10. On December 31, 2010, Bohol Company received two P2,000,000 notes receivable from customers in exchange for services rendered. On both notes, interest is calculated on the outstanding principal balance at an annual rate of 2%. The note from ABC Company, made under customary trade terms is due in 9 months including interest and the note from XYZ Company is due in five years with the interest payable annually on December 31, 2011 and every December 31 thereafter. The market interest rate for similar notes on December 31, 2010 is 10%. The present value factors at 10% are:

Present value of P1 due in 9 months 0.930

Present value of P1 due in five years 0.621

Present value of an ordinary annuity for five years 3.791

Present value of an annuity due for five year 4.170

At what amount should these two notes receivable be reported in Bohol's Dec. 31, 2010 balance sheet?

ABC XYZ

a. P2,000,000 P1,366,200

b. P2,000,000 P1,393,640

c. P1,860,000 P1,366,200

d. P1,860,000 P1,393,640

11. On August 1, Samuel Corporation assigned P20,000 of its P56,000 of accounts receivable. The finance company advanced 90% of the assigned accounts less a P2,000 fee. Interest is 12% and payable monthly on the beginning-of-period loan balance. A loan payment is remitted at the end of each month. Each payment includes principal and interest. The amount of each loan payment equals the cash collected on receivables during the month plus interest on the loan balance.

If P8,000 was collected on accounts receivable during August, the entry for the first loan payment would include a

a. debit to Interest Expense of P180.

b. credit to Cash of P8,000.

c. credit to Account Receivable Assigned of P8,000.

d. debit to Notes Payable of P8,180.

12. On December 31, 2009, Teodoro Corporation needed cash for its working capital expenditures. Teodoro sold P2,000,000 on a non-recourse basis accounts receivable to a factor for 80% of its face value. Teodoro maintains an allowance for doubtful accounts of P100,000 on the accounts receivable sold. The bank withheld 10% of the purchased price as protection against any future returns of merchandise. In addition, the factor charged a service fee of 2% of the accounts receivable. Returns against the factored receivables upon final settlement totaled P30,000. How much loss from factoring should Teodoro recognize as a result of the above transactions?

a. P370,000

b. P340,000

c. P440,000

d. P300,000