On December 31, 2020, an entity sold a piece of land costing P800, 000 and received a 3-year, 3%, P1, 200, 000 note as payment. The interest on the note is payable annually every December 31. The principal amount of the note is payable on December 31, 2023. The prevailing interest rate for similar obligation on December 31, 2020 is 10%. Assume that there is no available fair value for the land on the date of sale. Using four decimal places for the PV factor, which of the following is part of the possible entries that would appear up to the maturity of the note? a. credit Gain on sale of land, P400, 000 b. debit Discount on Notes Receivable, P112, 383. c. debit Cash, P1, 236, 000 d. credit Interest revenue, P76, 383
On December 31, 2020, an entity sold a piece of land costing P800, 000 and received a 3-year, 3%, P1, 200, 000 note as
payment. The interest on the note is payable annually every December 31. The principal amount of the note is payable on
December 31, 2023. The prevailing interest rate for similar obligation on December 31, 2020 is 10%. Assume that there is no
available fair value for the land on the date of sale. Using four decimal places for the PV factor, which of the following is part
of the possible entries that would appear up to the maturity of the note?
a. credit Gain on sale of land, P400, 000
b. debit Discount on Notes Receivable, P112, 383.
c. debit Cash, P1, 236, 000
d. credit Interest revenue, P76, 383
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