Reason Inc. sold its old equipment with original cost of P2,000,000 and accumulated depreciation of P1,800,000 for 3-year P250,000 note. The interest rate of the loan is 7% while the market rate of similar notes is 8%. The journal entry to record the disposal of the equipment would NOT include CR: Equipment 2,000,000 CR: Unearned Interest Income - 6,443 DR: Note Receivable - 250,000; O CR: Gain on sale of equipment – 56,561

Reason Inc. sold its old equipment with original cost of P2,000,000 and accumulated depreciation of P1,800,000 for 3-year P250,000 note. The interest rate of the loan is 7% while the market rate of similar notes is 8%. The journal entry to record the disposal of the equipment would NOT include CR: Equipment 2,000,000 CR: Unearned Interest Income - 6,443 DR: Note Receivable - 250,000; O CR: Gain on sale of equipment – 56,561

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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