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Beverly Place received a three-year, non-interest-bearing trade note for P50,000 on January 1, 2021. The current interest rate at that time was 15% for similar notes. Beverly recorded the receipt of the note as follows: Dr. Notes Receivable – 50,000, Cr. Sales – 50,000. What is the effect of this accounting for the note receivable on Beverly Place’s profit for the years 2021, 2022, and 2023 and its retained earnings at the end at the end of 2023, respectively? A.) Overstate, overstate, understate, no effect B.) Overstate, understate, understate, no effect C.) Overstate, understate, understate, understate D.) No effect on any of these

Beverly Place received a three-year, non-interest-bearing trade note for P50,000 on January 1, 2021. The current interest rate at that time was 15% for similar notes. Beverly recorded the receipt of the note as follows: Dr. Notes Receivable – 50,000, Cr. Sales – 50,000. What is the effect of this accounting for the note receivable on Beverly Place’s profit for the years 2021, 2022, and 2023 and its retained earnings at the end at the end of 2023, respectively? A.) Overstate, overstate, understate, 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
Chapter13: Investments And Long-term Receivables
Section: Chapter Questions
Problem 10MC: On January 1, 2019, Park Company accepted a 36,000, non-interest-bearing, 3-year note from a major...
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Beverly Place received a three-year, non-interest-bearing trade note for P50,000 on January 1, 2021. The current interest rate at that time was 15% for similar notes. Beverly recorded the receipt of the note as follows: Dr. Notes Receivable – 50,000, Cr. Sales – 50,000. What is the effect of this accounting for the note receivable on Beverly Place’s profit for the years 2021, 2022, and 2023 and its retained earnings at the end at the end of 2023, respectively? A.) Overstate, overstate, understate, no effect B.) Overstate, understate, understate, no effect C.) Overstate, understate, understate, understate D.) No effect on any of these
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