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18.Booster Company received a three-year, non-interest bearing note for P500,000 for merchandise sold on January 1, 2021.   The current interest rate at that time was 15% for similar notes.   Booster recorded the receipt of the note as follows: Notes Receivable         500,000       Sales                               500,000 What is the effect of this accounting for notes receivable on Booster Company's profit for years 2021, 2022 and 2023 and its retained earnings at the end of 2023, respectively?     a. Overstate, overstate, understated, no effect b. Overstate, understate, understate, no effect c. Overstate, understate, understate, understate d. No effect on any of these

18.Booster Company received a three-year, non-interest bearing note for P500,000 for merchandise sold on January 1, 2021.   The current interest rate at that time was 15% for similar notes.   Booster recorded the receipt of the note as follows: Notes Receivable         500,000       Sales                               500,000 What is the effect of this accounting for notes receivable on Booster Company's profit for years 2021, 2022 and 2023 and its retained earnings at the end of 2023, respectively?     a. Overstate, overstate, understated, no effect b. Overstate, understate, understate, no effect c. Overstate, understate, understate, understate d. No effect on any of these

Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable
Section: Chapter Questions
Problem 28E: On January 1, 2019, Northfield Corporation becomes delinquent on a 100,000, 14% note to First...
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18.Booster Company received a three-year, non-interest bearing note for P500,000 for merchandise sold on January 1, 2021.   The current interest rate at that time was 15% for similar notes.   Booster recorded the receipt of the note as follows:

Notes Receivable         500,000
      Sales                               500,000

What is the effect of this accounting for notes receivable on Booster Company's profit for years 2021, 2022 and 2023 and its retained earnings at the end of 2023, respectively?
 
 
a. Overstate, overstate, understated, no effect
b. Overstate, understate, understate, no effect
c. Overstate, understate, understate, understate
d. No effect on any of these
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