On January 1, 20x1, Drive Co. paid cash of P200,000 and issued a noninterest-bearing note P2,000,000 in exchange for vehicle. The note is due in four equal annual installments. The first installment is due on January 1, 20x1 and the succeeding installments are due every 1st of January. The prevailing rate of interest for this type of not is 12%. Requirements: a. Prepare the journal entries. b. How much is the interest expense in 20x2? c. How much is the carrying amount of the note on December 31, 20x1? Please answer optionAand B and c

On January 1, 20x1, Drive Co. paid cash of P200,000 and issued a noninterest-bearing note P2,000,000 in exchange for vehicle. The note is due in four equal annual installments. The first installment is due on January 1, 20x1 and the succeeding installments are due every 1st of January. The prevailing rate of interest for this type of not is 12%. Requirements: a. Prepare the journal entries. b. How much is the interest expense in 20x2? c. How much is the carrying amount of the note on December 31, 20x1? Please answer optionAand B and c

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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