On January 1 2020, Machete Company sold land with a carrying amount of P1 500 000 in exchange for a 9 month 10% note with face value of P2 000 000. The 10% rate properly reflects the time value of money for this type of note. On April 1 2020 the entity discounted the note with recourse. The bank discount rate is 12%. The discounting transaction is accounted for as a secured borrowing. On October 1 2020, the make dishonored the note receivable. The entity paid the bank the maturity value of the note plus the protest fee of P10 000. On December 31 2020, the entity collec
On January 1 2020, Machete Company sold land with a carrying amount of P1 500 000 in exchange for a 9 month 10% note with face value of P2 000 000.
The 10% rate properly reflects the time value of money for this type of note.
On April 1 2020 the entity discounted the note with recourse. The bank discount rate is 12%. The discounting transaction is accounted for as a secured borrowing.
On October 1 2020, the make dishonored the note receivable. The entity paid the bank the maturity value of the note plus the protest fee of P10 000.
On December 31 2020, the entity collected the dishonored note receivable in full plus 12% annual interest on the total amount due.
Required: Prepare
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
