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Note Receivables Exercises, Exercises of Accounting

National University of SingaporeAccounting

This is the notes receivable exercises from my university to practice my computation skills

Typology: Exercises

2024/2025

Uploaded on 11/07/2025

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1. Interest receivable is computed as: Face amount x Stated interest rate or Nominal rate
2. Jan 1, 20x1 Crybaby Co. received a noninterest bearing note with face amount of P2M
and appropriately recognized it at P1,241,843. The note matures in lump sum
on Dec. 31, 20x5. The effective interest rate is 10%. The unamortized discount
on Dec. 31, 20x2 is P497,370.
Jan 1, 20x1 - recognized at 1,241,843, face amount is 2M
Find the unamortized discount on Dec. 31, 20x2
Face amount - carrying amount on 20x2
recognized amount on Jan 1, 20x1 = 1,241,843
Dec 31, 20x1 1,241,843.00 +
Dec 31, 20x2 1,366,027.30 +
Dec 31, 20x3 1,502,630.03 +
Dec 31, 20x4 1,652,893.03 +
Dec 31, 20x5 1,818,182.34 +
Face amount 2,000,000.00
Dec 31, 20x2 (1,502,630.03)
Discount 20x2 497,369.97
3. Raining Co. receives a 3 year, noninterest bearing note of 1,000,000. Raining Co.
determines that the effective interest rate on the transaction is 10%
The initial carrying amount of the note receivable is computed as 1,000,000 x PV of 1
@10%, n=3.
As noninterest bearning note, meansno periodic interest payments
Face amount 3,000,000.00
PV of 1 @10%, n=3 0.75 lumpsum
Initial Carrying Amount 2,253,944.40
Unearned Interest 746,055.60
4. Wet Co. receives a noninterest-bearing note of 3,000,000. The note is collectible in 3 equal
annual installments of 1,000,000 due at the end of each year. Wet Co. determines that the effective
interest rate on the transaction is 10%. The initial carrying amount of the note receivable is computed
as 1,000,000 x PV of 1 @10%, n=3
Face amount 3,000,000.00
Per year payment 1,000,000.00
PV of OA @10%, n=3 2.45
Carrying Amount 2,448,685.20
Unearned Interest 551,314.80
5. Fold Co, received a 2 year, non-interest bearing note of 1.2M in exchange for the sale of commodity
If the customer had paid in cash at the sale date, the purchase price would have been 800K. At initial
recognition, Fold Co. records unearned interest of 400K.
6. 2 yr noninterest bearning note of 500K from the sale of equipment with cash price of 400k.
The note requires lump sum payment at maturity date. Bind Co. determined that the
effective interest rate on the transaction is 10%. The interest income in Year 1 is 50K.
Interest income = Present value x effective rate x time
Present value (cash price) 100,000.00
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  1. Interest receivable is computed as: Face amount x Stated interest rate or Nominal rate
  2. Jan 1, 20x1 Crybaby Co. received a noninterest bearing note with face amount of P2M and appropriately recognized it at P1,241,843. The note matures in lump sum on Dec. 31, 20x5. The effective interest rate is 10%. The unamortized discount on Dec. 31, 20x2 is P497,370. Jan 1, 20x1 - recognized at 1,241,843, face amount is 2M Find the unamortized discount on Dec. 31, 20x Face amount - carrying amount on 20x recognized amount on Jan 1, 20x1 = 1,241, Dec 31, 20x1 1,241,843.00 + Dec 31, 20x2 1,366,027.30 + Dec 31, 20x3 1,502,630.03 + Dec 31, 20x4 1,652,893.03 + Dec 31, 20x5 1,818,182.34 + Face amount 2,000,000. Dec 31, 20x2 (1,502,630.03) Discount 20x2 497,369.
  3. Raining Co. receives a 3 year, noninterest bearing note of 1,000,000. Raining Co. determines that the effective interest rate on the transaction is 10% The initial carrying amount of the note receivable is computed as 1,000,000 x PV of 1 @10%, n=3. As noninterest bearning note, meansno periodic interest payments Face amount 3,000,000. PV of 1 @10%, n=3 0.75 lumpsum Initial Carrying Amount 2,253,944. Unearned Interest 746,055.
  4. Wet Co. receives a noninterest-bearing note of 3,000,000. The note is collectible in 3 equal annual installments of 1,000,000 due at the end of each year. Wet Co. determines that the effectiv interest rate on the transaction is 10%. The initial carrying amount of the note receivable is comp as 1,000,000 x PV of 1 @10%, n= Face amount 3,000,000. Per year payment 1,000,000. PV of OA @10%, n=3 2. Carrying Amount 2,448,685. Unearned Interest 551,314.
  5. Fold Co, received a 2 year, non-interest bearing note of 1.2M in exchange for the sale of commo If the customer had paid in cash at the sale date, the purchase price would have been 800K. At ini recognition, Fold Co. records unearned interest of 400K.
  6. 2 yr noninterest bearning note of 500K from the sale of equipment with cash price of 400k. The note requires lump sum payment at maturity date. Bind Co. determined that the effective interest rate on the transaction is 10%. The interest income in Year 1 is 50K. Interest income = Present value x effective rate x time Present value (cash price) 100,000.

Effective interest rate 0. Interest income 10,000.

  1. Cut co receives a long-term, noninterest-bearning note of 100,000. The note requires lump sum payment at maturity date. Cut co, determines that the effective interest rate on the transaction is while the appropriate present value factor is 0.90. The interest income in Year 1 is 9,000. Face amount 100,000. x PV Factor 0. = Initial Carrying Amount 90,000. x Effective interest rate 0. = Year 1 Interest Income 9,000.
  2. Use the information in the preceding problem Cut co. Interest income in year 2 is 9, Initial Carrying Amount 90,000.
    • Year 1 Interest Income 9,000. = Carrying amount at Year 1 99,000. Beginning of Year 2 99,000. x Effective interest rate 0. = Year 2 Interest Income 9,900.
  3. Bond Co. receives 1,000,000 noninterest bearing note that is collectible in installments On initial recognition, the carrying amount of the note was 900k. If the amortization of the note du the period is 50k, the carrying amount of the note at the end of the period must be 950k. Face amount 1,000,000. Carrying amount (Present Value) 900,000. Discount 100,000. Collectible in installment means it decreases because you pay. Unlike lumpsum, it incre Carrying amount 900,000.
    • Amortization (50,000.00) Carrying amount (end of period 850,000.
  4. Pawn co. received a 1.2M noninterest bearing note that is collectible in installments. On initial recognition, the carrying amount of the note was 900k. At the end of Year 1, the carrying of the note was 800k, the amortization of the note in Year 1 must be 100k. Carrying amount 900,000. Amortization (100,000.00) Carrying amount (end of period 800,000.

The note requires lump sum st rate on the transaction is 10% in Year 1 is 9,000. me in year 2 is 9, tible in installments amortization of the note during riod must be 950k. pay. Unlike lumpsum, it increases le in installments. e end of Year 1, the carrying amount

  1. Incorrect statement - All interest-bearing notes need not be discounted a note with below market interest rate is discounted
  2. The concept that best supports the discounting of notes to their present value is time value of the money
  3. Which of the following rates is used to compute for the interest income on a receivable Interest income - effective interest rate Interest receivable - stated interest rate
  4. Railing Co. obtained a 4-year 600k noninterest bearning note that requires payment in lump sum at maturity date. Railing determined that the effective interest rate on the note is 12% which of the following statements is correct? lumpsum uses PV of 1
  5. May 1 of this year, a company received a one-year note receivable bearning interest at the market rate. The face amount of the note receivable and the entire amount of the interest rate are due on April 30 of next year. At Dec 31 of this year, the company should report on its balance sheet:

no. 6 PV of 1 PV of OA

Payment terms Lumpsum PV of 1 0.75 Lumpsum

Date Collection Interest Receivable Interest Income

Stated Rate Interest Receivable PV of 1 Effective Rate

Amortization Carrying Amount 4,073,666. 1,497,633.36 2,576,033. 1,512,396.69 1,063,636. 1,528,636.36 (465,000.00) 1,546,500.00 (2,011,500.00) 1,566,150.00 (3,577,650.00) 1,587,765.00 (5,165,415.00) 1,611,541.50 (6,776,956.50) 1,637,695.65 (8,414,652.15) 1,666,465.22 (10,081,117.37) 1,698,111.74 (11,779,229.10) PV of AD

Stated Rate Interest Receivable PV of 1 Effective Rate 0.05 400,000.00 0. 0.05 360,000.00 0.94 0. 0.05 320,000.00 0.89 0. 0.05 280,000.00 0.84 0. 0.05 240,000.00 0.79 0. 0.05 200,000.00 0.75 0.

PRINCIPAL COMPUTATION

BEG FACE

INTEREST COMPUTATION

BEG FACE

DATE

Carrying Amount 12/31/ 4,633,040. PRINCIPAL COMPUTATION BEG FACE 2,000,000. INTEREST COMPUTATION BEG FACE 2,000,000. 1,333,333. 666,666. DATE 1/1/

PRINCIPAL COMPUTATION

INTEREST COMPUTATION

  • Principal 6,000,000.00 0.61 7.
  • years 10.
  • effective rate 0.
  • stated rate 0.
  • date of note Jan 1, 20x
  • Payment terms Installment Dec 31, 20x
  • PV of OA 7.
  • 20x1 6,000,000.00 10.00 10. Interest
  • 20x1 6,000,000.00 9.00 10.
  • 20x2 6,000,000.00 8.00 10.
  • 20x2 6,000,000.00 7.00 10.
  • 20x3 6,000,000.00 6.00 10.
  • 20x3 6,000,000.00 5.00 10.
  • 20x4 6,000,000.00 4.00 10.
  • 20x4 6,000,000.00 3.00 10.
  • 20x5 6,000,000.00 2.00 10.
  • 20x5 6,000,000.00 1.00 10.
  • Jan 1, 20x Date Collection Interest Receivable Interest Income
  • Jan 1, 20x1 600,000.00 330,000.00 306,834.
  • Dec 31, 20x1 600,000.00 297,000.00 275,676.
  • Jan 1, 20x2 600,000.00 264,000.00 244,610.
  • Dec 31, 20x2 600,000.00 231,000.00 213,640.
  • Jan 1, 20x3 600,000.00 198,000.00 182,772.
  • Dec 31, 20x3 600,000.00 165,000.00 152,011.
  • Jan 1, 20x4 600,000.00 132,000.00 121,362.
  • Dec 31, 20x4 600,000.00 99,000.00 90,830.
  • Jan 1, 20x5 600,000.00 66,000.00 60,421.
  • Dec 31, 20x5 600,000.00 33,000.00 30,142.
  • Principal 4,500,000.00 0.75 2. no. 9 PV of 1 PV of OA
  • years 3.
  • effective rate 0.
  • stated rate 0.
  • date of note Jan 1, 20x
  • 20x4 8,000,000.00 4.00 10.
  • 20x4 8,000,000.00 3.00 10.
  • 20x5 8,000,000.00 2.00 10.
  • 20x5 8,000,000.00 1.00 10.
  • Jan 1, 20x
  • Dec 31, 20x1 800,000.00 360,000.00 414,413. Jan 1, 20x1 800,000.00 - -
  • Jan 1, 20x2 800,000.00 320,000.00 369,678.
  • Dec 31, 20x2 800,000.00 280,000.00 324,659.
  • Jan 1, 20x3 800,000.00 240,000.00 279,338.
  • Dec 31, 20x3 800,000.00 200,000.00 233,698.
  • Jan 1, 20x4 800,000.00 160,000.00 187,720.
  • Dec 31, 20x4 800,000.00 120,000.00 141,384.
  • Jan 1, 20x5 800,000.00 80,000.00 94,667.
  • Dec 31, 20x5 800,000.00 40,000.00 47,547.
  • Principal 1,000,000.00 0.59 2. Problem 2 PV of 1 PV of OA
  • years 4.
  • effective rate 0.
  • date of note Jan 1, 20x stated rate -
  • PV of 1 0. Payment terms lumpsum
  • 20x1 4.00 4. Interest
  • 20x1 3.00 4.
  • 20x2 2.00 4.
  • 20x2 1.00 4.
  • 20x3 - 4.
  • 20x3 (1.00) 4.
  • 20x4 (2.00) 4.
  • 20x4 (3.00) 4.
  • 20x5 (4.00) 4.
  • 20x5 (5.00) 4.
  • Jan 1, 20x
  • Jan 1, 20x1 - - 82,891.
  • Dec 31, 20x1 - #VALUE! 94,496.
  • Jan 1, 20x2 - #VALUE! 107,725.
  • Dec 31, 20x2 - #VALUE! 122,807.
  • Jan 1, 20x3 - #VALUE! 140,000.
  • Dec 31, 20x3 - #VALUE! 159,600.
  • Jan 1, 20x4 - #VALUE! 181,944.
  • Dec 31, 20x4 - #VALUE! 207,416.
  • Jan 1, 20x5 - #VALUE! 236,454.
  • Dec 31, 20x5 - #VALUE! 269,558.
  • 1/1/x1 NR 1,000,000.
  • UI 407,920.
  • Land 500,000.
  • Gain 92,080.
  • 12/31/x1 UIT 94,496.
  • II 94,496.
  • 12/31/x2 UIT 82,891.
  • II 82,891.
  • 12/31/x3 UIT 82,891.
  • II 82,891.
  • 12/31/x4 UIT 82,891.
  • II 82,891.
  • 0.06 330,000.00 0.95 0.
  • 0.06 297,000.00 0.91 0.
  • 0.06 264,000.00 0.86 0.
  • 0.06 231,000.00 0.82 0.
  • 0.06 198,000.00 0.78 0.
  • 0.06 165,000.00 0.75 0.
  • 0.06 132,000.00 0.71 0.
  • 0.06 99,000.00 0.68 0.
  • 0.06 66,000.00 0.64 0.
  • 0.06 33,000.00 0.61 0.
  • 6,136,695. Amortization Carrying Amount
  • 623,165.20 5,513,530.
  • 621,323.47 4,892,207.
  • 619,389.64 4,272,817.
  • 617,359.12 3,655,458.
  • 615,227.08 3,040,231.
  • 612,988.43 2,427,242.
  • 610,637.85 1,816,605.
  • 608,169.74 1,208,435.
  • 605,578.23 602,857.
    1. PV of AD
  • 0.05 160,000.00 0.70 0.
  • 0.05 120,000.00 0.67 0.
  • 0.05 80,000.00 0.63 0.
  • 0.05 40,000.00 0.59 0.
  • 7,706,892.
  • 800,000.00 6,906,892.
  • 745,586.46 6,161,305.
  • 750,321.65 5,410,984.
  • 755,340.95 4,655,643.
  • 760,661.41 3,894,981.
  • 766,301.09 3,128,680.
  • 772,279.16 2,356,401.
  • 778,615.90 1,577,785.
  • 785,332.86 792,452.
  • 792,452.83 0.
    1. PV of AD
    • #VALUE! 0. Stated Rate Interest Receivable PV of 1 Effective Rate
    • #VALUE! 0.88 0.
    • #VALUE! 0.77 0.
    • #VALUE! 0.67 0.
    • #VALUE! 0.59 0.
    • #VALUE! 0.52 0.
    • #VALUE! 0.46 0.
    • #VALUE! 0.40 0.
    • #VALUE! 0.35 0.
    • #VALUE! 0.31 0.
  • 368,181.82 4,000,000.
  • 223,140.50 3,200,000.
  • 101,427.50 2,400,000.
    • 1,600,000.
  • (83,824.38) 800,000.
  • (251,913.99) 1/1/ (207,829.04) DATE
  • (286,265.89) 12/31/
  • (608,564.99) 12/31/
  • 692,749.81 12/31/
  • 4,073,666.42 12/31/
  • 12/31/
  • 5,000,000. BEG FACE
  • Carrying Amount 5,000,000. BEG FACE
  • 6,241,353.82 4,000,000.
  • 3,000,000.
  • 2,000,000.
  • 1,000,000.
  • 1/1/ DATE
  • 12/31/
  • 12/31/
  • 12/31/
    • 12/31/
  • 339,622.64 12/31/
  • 284,798.
  • 235,093.
  • 190,102.
  • 149,451.

7,706,892.30 PRINCIPAL COMPUTATION

BEG FACE

INTEREST COMPUTATION

BEG FACE

Carrying Amount 600,000. 592,080. DATE 1/1/ 6/30/ 12/31/ 6/30/ 12/31/ 6/30/ 12/31/ 6/30/ #VALUE! 12/31/ #VALUE! 6/30/ #VALUE! 12/31/ #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! PRINCIPAL COMPUTATION BEG FACE