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What Do We Debit? Can We Debit Receivable? (Can We Make Singil?)

The document discusses two products, A and B, that were delivered on different dates. Payment is due only if both products are delivered. Product A was delivered on February 10th. Product B was delivered on February 14th. It also discusses what accounting entries would be made if a customer paid immediately before any deliveries were made.

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Nicole
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9 views

What Do We Debit? Can We Debit Receivable? (Can We Make Singil?)

The document discusses two products, A and B, that were delivered on different dates. Payment is due only if both products are delivered. Product A was delivered on February 10th. Product B was delivered on February 14th. It also discusses what accounting entries would be made if a customer paid immediately before any deliveries were made.

Uploaded by

Nicole
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Deliver product A and product B

Payment is due only if both products are delivered

Product A was delivered first on February 10


Tang, Alger:
2/10/2021 Contract Asset 100 what do we debit?
Can we debit
Revenue - A 100 receivable?
(can we make singil?)
Product B was delivered on Febrruary 14
Tang, Alger:
2/14/2021 Receivable 150 can we make singil na?
Revenue - B 50 how much can we make
Contract Asset 100 singil?

What if naman wala ka delivery but customer paid immediately on February 1

2/1/2021 Cash 150


Contract Liability 150
Contract liability is unearned income
Initial investment is P10,000
Compounded annually @ 10% interest rate

How much is the investment after 3 years?

Y0 10,000.00
Y1 11,000.00 (10,000 x 1.1)
Y2 12,100.00 (10,000 x 1.1 x 1.1)
Y3 13,310.00 (10,000 x 1.1 x 1.1 x 1.1)

13,310 = 10,000 x 1.1^3


13,310 divide 1.1^3 = 10,000

When we compute cash flows, always use the stated interest rate
Stated rate = sabi ni debtor na babayaran nya

For computation of present value factor, always use the market interest rate/effective interest rate
PV represents the fair value on initial date (based on market prices)

Example:
Face amount 100,000.00 Cash flows: End of
Stated rate 10% Y1 Y2
Effective rate 12% Principal
Period 3 years (annually) Interest (stated) 10,000.00 10,000.00
Projected cash flows 10,000.00 10,000.00
PVF (effective) 0.89 0.80
PV of cash flows 8,928.57 7,971.94

Total PV
(10,000 x 0.89) + (10,000 x 0.8) + (10,000 x 0.71)
Factor out 10,000 OR Cash flow
10,000 x (0.89 + 0.8 + 0.71) PV of principal 100,000.00
10,000 x PVFOA (GT) PV of interest 10,000.00

Step 1:
Compute PVF of 1
1.12 dibay dibay = 3 times

Step 2:
Get the PV of Principal (DO NOT PRESS EQUAL)
0.7118 x 100,000 M+

Step 3:
Get the PVFOA
Press GT

Step 4:
Get PV of interest
2.4018 x 10,000 M+

Step 5:
Get total PV
MR
3 raised to 4
3 x x = (squared)
= (cube)

1.1 dibay dibay = (raised to -1)


= (raised to -2)
= (raised to -3)

ffective interest rate

End of
Y3
100,000.00
10,000.00
110,000.00
0.71
78,295.83

95,196.34

PVF PV
0.71 71,178.02
2.40 24,018.31
95,196.34

0.7118

71,178.00
2.4018

24,108.00

95,196.34

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