Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

On April 1, 2020, Shalimar Company discounted with recourse a 9-month, 10% note dated January 1, 2020 with face of P6,000,000. The bank discount rate

On April 1, 2020, Shalimar Company discounted with recourse a 9-month, 10% note dated January 1, 2020 with face of P6,000,000. The bank discount rate is 12%. The discounting transaction is accounted for as a conditional sale with recognition of a contingent liability. On October 1, 2020, the maker dishonored the note receivable. The entity paid the bank the maturity value of the note plus protest fee of P50,000. On December 31, 2020, the entity collected the dishonored note in full plus 12% (annual interest rate) from the maturity date up to settlement date based on face amount of the note for humanitarian reasons. What is the total amount collected from the customer on December 31, 2020?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Data Analytics for Accounting

Authors: Vernon Richardson

1st edition

1260375196, 9781260375183 , 978-1260375190

More Books

Students also viewed these Accounting questions