On January 1, 2020, Manila Company acquired a tract of land for P5,250,000. The entity paid P1,250,000 down and signed a noninterest bearing note for the balance which is due on January 1, 2023. Thre was no established exchange pricce for the land and the note had no ready market. The prevailing interest rate for this type of note was 12%. The present value of 1 at 12% for 3 period is .7118 Required: Prepare Journal entries to record purchase of land on January 1, 2020, interest expense for 2020 and fully payament of the note on January 1, 2023
On January 1, 2020, Manila Company acquired a tract of land for P5,250,000. The entity paid P1,250,000 down and signed a noninterest bearing note for the balance which is due on January 1, 2023. Thre was no established exchange pricce for the land and the note had no ready market. The prevailing interest rate for this type of note was 12%. The present value of 1 at 12% for 3 period is .7118 Required: Prepare Journal entries to record purchase of land on January 1, 2020, interest expense for 2020 and fully payament of the note on January 1, 2023
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, 2020, Manila Company acquired a tract of land for P5,250,000. The entity paid P1,250,000 down and signed a noninterest bearing note for the balance which is due on January 1, 2023.
Thre was no established exchange pricce for the land and the note had no ready market. The prevailing interest rate for this type of note was 12%. The present value of 1 at 12% for 3 period is .7118
Required:
Prepare
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