Solution Manual Financial Accounting Valix and Peralta Volume One - 2008 Edition Part 2

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CHAPTER 6

Problem 6-1 Problem 6-2

1. C 6. B 1. C 6. A
2. C 7. C 2. D 7. B
3. C 8. B 3. C 8. B
4. A 9. A 4. C 9. B
5. C 10. C 5. B 10. D

Problem 6-3

March 1 Cash2,000,000
Note payable – bank 2,000,000

April 1 Cash 980,000
Sales discount 20,000
Accounts receivable 1,000,000

June 1 Cash2,000,000
Accounts receivable 2,000,000

Sept. 1 Note payable – bank2,000,000
Interest expense (12% x 2,000,000 x 6/12) 120,000
Cash 2,120,000

Problem 6-4

Requirement 1

2008
Oct. 1 Cash3,600,000
Discount on note payable (10% x 4,000,000) 400,000
Note payable – bank 4,000,000

1 Interest expense (400,000 x 3/12) 100,000 Discount on note payable 100,000

2009
Oct. 1 Note payable – bank4,000,000
Cash 4,000,000

Dec. 31 Interest expense 300,000
Discount on note payable 300,000

Requirement 2

Current liabilities:
Note payable – bank (Note 3) 4,000,000 Discount on note payable ( 300,000)
Carrying value 3,700,000

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Note 3 – Note payable – bank

Accounts of P5,000,000 are pledged to secure the bank loan of P4,000,000.

Problem 6-5

May 1 Accounts receivable – assigned800,000
Accounts receivable 800,000

1 Cash (640,000 – 20,000)620,000
Service charge 20,000
Note payable – bank 640,000

5 Sales return 30,000
Accounts receivable – assigned 30,000

10 Cash490,000
Sales discount (2% x 500,000) 10,000
Accounts receivable – assigned 500,000

June 1 Note payable – bank490,000
Interest expense (2% x 640,000) 12,800
Cash 502,800

7 Allowance for doubtful accounts 10,000
Accounts receivable – assigned 10,000

20 Cash200,000
Accounts receivable – assigned 200,000

July 1 Note payable – bank (640,000 – 490,000)150,000 Interest expense (2% x 150,000) 3,000 Cash 153,000

1 Accounts receivable 60,000
Accounts receivable – assigned 60,000

Accounts receivable – assigned 800,000 Less: Collections 690,000 Sales discount 10,000

Sales return 30,000
Worthless accounts 10,000 740,000 Balance 60,000

Problem 6-6

July 1 Accounts receivable – assigned 1,500,000 Accounts receivable 1,500,000

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July 1 Cash (1,125,000 – 60,000) 1,065,000
Service charge (4% x 1,500,000) 60,000 Note payable – bank 1,125,000

Aug. 1 Note payable – bank800,000
Accounts receivable – assigned 800,000

1 Interest expense (2% x 1,125,000) 22,500...
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