n January 1, 2021, Dark Company has a note payable to bank in the amount P2,800,000. Transactions during 2021 and other information relating to liabilities are: a. Principal amount of the note payable to bank is P2,800,000 and bears a 12% interest. The note is dated April 1, 2020 and is payable in four equal installments beginning April 1, 2021. The first principal and interest payment was made on April 1, 2021. b. On July 1, 2021, the entity issued for P1,774,000 a P2,000,000 face amount note to a wealthy shareholder. The note was dated July 1, 2021 and matures on July 1, 2022. No explicit interest rate is stated in the note and the entire face amount of the note is payable at maturity date.
On January 1, 2021, Dark Company has a note payable to bank in the amount
P2,800,000.
Transactions during 2021 and other information relating to liabilities
are:
a. Principal amount of the note payable to bank is P2,800,000 and
bears a 12% interest. The note is dated April 1, 2020 and is payable
in four equal installments beginning April 1, 2021. The first
principal and interest payment was made on April 1, 2021.
b. On July 1, 2021, the entity issued for P1,774,000 a P2,000,000 face
amount note to a wealthy shareholder. The note was dated July 1,
2021 and matures on July 1, 2022. No explicit interest rate is
stated in the note and the entire face amount of the note is payable
at maturity date.
Required:
A. Prepare
B. Compute the current liabilities on December 31, 2021.
C. Determine the interest expense to be reported in 2021
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