Problem 9-6 (IAA) On January 1, 2020, Machete Company sold land with 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 maker dishonored the note receivable. The entity paid the bank the maturity value of the note plus 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 journal entries to record the transactions.

Problem 9-6 (IAA) On January 1, 2020, Machete Company sold land with 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 maker dishonored the note receivable. The entity paid the bank the maturity value of the note plus 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 journal entries to record the transactions.

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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