GUIDELINES IN INPUTTING ANSWERS IN CANVAS:
1. In preparing your journal/adjusting entries, use the following chart of accounts and choose the
corresponding letter in making your entries:
Letter Account Title Letter Account Title Letter Account Title
A Cash F Machinery K Interest Income
B Accounts Receivable G Accumulated Depreciation L Gain on Sale of Land
C Notes Receivable H Land M Loss on Sale of Land
D Advances to President I Unearned Interest Income N Gain on Sale of Machinery
E Interest Receivable J Sales O Loss on Sale of Machinery
2. If the entry is a compound entry or has multiple debits or credits, the line items must be arranged in the
order shown in the chart of accounts.
3. In order to achieve uniformity in our answers, use the whole/continuous present value (PV) factor.
However, all computations shall be rounded off to the nearest peso. See below for example or see
Illustrative Problem on Notes Receivable
4. Do not put any decimal places in your answers. If the answer is 123,456, inputting 123,456.0 or 123,456.00
will be considered incorrect.
5. It is suggested to input your answers using uppercase letters, but Canvas is not case-sensitive (This is a
recent discovery). So if the correct answer is CASH, inputting Cash, cash or even cAsH, will not invalidate
your answer.
6. Canvas ignores any extra spaces at the start or at the end of an answer, but will not ignore extra spaces in
the middle of an answer. To address this and avoid issues on unnoticed extra spaces, use the following
format in inputting your answers: [Link]
If the correct answer is
Cash 2,000
Accounts Receivable 2,000
You should be inputting: DR.A.2,[Link].B.2,000
If the correct answer is
Cash 56,000
Notes Receivable 50,000
Interest Income 6,000
You should be inputting: DR.A.56,[Link].C.50,[Link].K.6,000
Example for Guideline No.3:
Let’s have a Feb. 1, 2017, P300,000, non-interest bearing note. P100,000 due Jan. 31 of every year. Effective
rate is 13%. The amortization schedule will be as follows:
Date Collection Interest Principal PV/Carrying Amount
02-01-2017 P236,115
01-31-2018 100,000 30,695 69,305 166,810
01-31-2019 100,000 21,685 78,315 88,495
01-31-2020 100,000 *11,505 88,495 -
*88,495 x 13% = 11,504.35. The last period interest will be a balancing figure so that the CA at the end will be zero.
Periodic Collection P100,000
-3
Multiplied by PV Factor of an annuity of P1 (1-(1.13) )
0.13 = 2.3611525978646
Present Value of Note, Feb. 01, 2017 236,115.2598 ~> P 236,115
Interest (02-01-17 to 01-31-18), 236,115 x 13% = 30,694.95 ~> P 30,695
Principal = Collection of P100,000 – P30,695 = P 69,305
Carrying Amount 01-31-18 = P236,115 – P69,305 = P 166,810
Interest Income for 2017:
(02-01-17 to 12-31-17) 30,695 x 11/12 = 28,137.0833 ~> P 28,137
Interest Income for 2018: This is 30,695 x 1/12 but
(01-01-18 to 01-31-18) 30,695 -28,137 = 2,558 minimizes effects of rounding off.
(02-01-18 to 12-31-18) 21,685 x 11/12 = 19,877.92 ~> 19,878 P 22,436
Note: Round off the components first before adding them.
*Alternatively, the interest for 01-01-18 to 01-31-18 may also be computed as 30,695 x 1/12 = 2,557.91667
rounded off to P2,558
Assignment-Notes Receivable:
ABC Co. had the following promissory notes on December 31, 2017:
Date of Note Face Value Maturity Date Interest Rate Per Annum
May 01, 2016 P1,000,000 P200,000 every May 1 for 5 years Non-interest bearing
Aug. 01, 2017 150,000 July 31, 2018 11%
Oct. 01, 2017 750,000 P250,000 plus interest on outstanding 12%
balance every Oct. 1
Additional Information:
A. The P1,000,000 note was for the sale of machinery with a cost of P1,200,000 and accumulated depreciation
of P360,000. The effective interest rate for a note of this type is 12%.
B. The P150,000 note was for the sale of merchandise.
C. The P750,000 note was issued by the president of ABC Co. in consideration for a loan extended to him the
company.
For 2018, ABC Co. received the following notes:
Date of Note Face Value Maturity Date Interest Rate Per Annum
Mar. 01, 2018 P800,000 March 1, 2021 Non-interest bearing
Nov. 01, 2018 500,000 P125,000 every Nov. 01 for 4 years. Non-interest bearing
Additional Information:
A. The P800,000 note was issued by a customer in settlement of his account with ABC Co. The effective
interest rate is 10%.
B. The P500,000 note was received as payment for the sale of land costing P350,000. A note of this type has
an effective interest rate of 11%.
Note: The entity makes reversing entries for accrual of interest on January 1 of every year.
REQUIRED:
1. Give the journal entry on May 1, 2016 to record the sale of machinery.
2. Give the adjusting entry on Dec. 31, 2016 to amortize the unearned interest income on the P1,000,000 note.
3. Give the journal entry to record the sale of merchandise on Aug. 1, 2017.
4. Give the journal entry to record the loan given to the President of ABC Co. on Oct. 1, 2017.
5. Give the entry for the amortization of unearned interest income on the P1,000,000 note in 2017.
6. Give the entry for the accrual of interest on the P150,000 note in 2017.
7. Give the entry for the accrual of interest on the P750,000 note in 2017.
For numbers 8 to 16 and 27 to 35, supply the missing figures for the partial balance sheet:
Dec. 31, 2017 Dec. 31,2018
Partial Balance Sheet Partial Balance Sheet
Current Assets:
Trade and Other Receivables
Notes Receivable [8] [27]
Less: Unearned Interest Income [9] [10] [28] [29]
Advances to President [11] [30]
Interest Receivable [12] [31]
Non-current Assets:
Other Non-current Assets:
Notes Receivable [13] [32]
Less: Unearned Interest Income [14] [15] [33] [34]
Advances to President [16] [35]
Note: All answers are rounded off to the nearest peso, so they must not have any decimals.
17. Give the reversing entry on Jan. 01, 2018.
18. Give the entry to record the collection of the P800,000 note in settlement of a customer’s account on Mar. 1,
2018.
19. Give the entry to record the collection of P200,000 on May 1, 2018.
20. Give the entry to record the collection of the P150,000 note on July 31, 2018.
21. Give the entry to record the collection of the 1 st installment of the P750,000 note.
22. Give the entry to record the sale of land on Nov. 1, 2018.
23. Give the entry for the amortization of unearned interest income on the P1,000,000 note in 2018.
24. Give the entry for the accrual of interest on the P750,000 face value note in 2018.
25. Give the entry for the amortization of unearned interest income on the P800,000 note in 2018.
26. Give the entry for the amortization of unearned interest income on the P500,000 note in 2018.
