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

FINANCIAL ACCOUNTING
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Author:Libby
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Chapter1: Financial Statements And Business Decisions
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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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