Answer the following subquestion as a result of an audit: a. How much is the correct carrying value of the notes payable as of December 31, 2023?b. How much is the correct interest expense that Meekah should recognized in the December 31, 2023 statement of comprehensive income?c. How much of the note is reported in the non-current liability section of the December 31, 2023 statement of financial position? Case 9 - Audit of Non-Current LiabilitiesYou were assigned to audit the non-current liabilities of Meekah Inc. for the year ended December 31, 2023.Upon inquiry and investigation, you noted that the company has issued one notes payable as of the reportingdate. Details about this were noted as follows:On June 30, 2022, Meekah Inc. purchased a machinery by paying P700,000 cash and issuing P4,000,000, 5%notes payable in 5 years. The note will be paid following the schedule below:Date of payment Amount dueJune 30, 2023June 30, 2024June 30, 2025June 30, 2026June 30, 2027DateJune 30, 20221,200,0001,000,000Interest is payable every June 30 of each year based on outstanding balance of the note. Interest payment startson June 30, 2023. Further investigation revealed that on the date of issue, the prevailing market rate of interestis at 3%. Journal entries in relation to the note for the years 2022 and 2023 were as follows:ParticularsDebit4,700,000June 30, 2023800,000600,000400,000MachineryCashNotes payableTo record purchase of machinery.Notes payableInterest expenseCashTo record payment of notes.No other entries were made related to the note payable.1,200,000200,000Credit700,0004,000,0001,400,000

Notes Payable is contract which promises to pay the debt in the future at a specified interest…

Answered: Answer the following subquestion as a…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Answer the following subquestion as a result of an audit:

a. How much is the correct carrying value of the notes payable as of December 31, 2023?

b. How much is the correct interest expense that Meekah should recognized in the December 31, 2023 statement of comprehensive income?

c. How much of the note is reported in the non-current liability section of the December 31, 2023 statement of financial position?

Case 9 - Audit of Non-Current Liabilities
You were assigned to audit the non-current liabilities of Meekah Inc. for the year ended December 31, 2023.
Upon inquiry and investigation, you noted that the company has issued one notes payable as of the reporting
date. Details about this were noted as follows:
On June 30, 2022, Meekah Inc. purchased a machinery by paying P700,000 cash and issuing P4,000,000, 5%
notes payable in 5 years. The note will be paid following the schedule below:
Date of payment Amount due
June 30, 2023
June 30, 2024
June 30, 2025
June 30, 2026
June 30, 2027
Date
June 30, 2022
1,200,000
1,000,000
Interest is payable every June 30 of each year based on outstanding balance of the note. Interest payment starts
on June 30, 2023. Further investigation revealed that on the date of issue, the prevailing market rate of interest
is at 3%. Journal entries in relation to the note for the years 2022 and 2023 were as follows:
Particulars
Debit
4,700,000
June 30, 2023
800,000
600,000
400,000
Machinery
Cash
Notes payable
To record purchase of machinery.
Notes payable
Interest expense
Cash
To record payment of notes.
No other entries were made related to the note payable.
1,200,000
200,000
Credit
700,000
4,000,000
1,400,000

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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