The following liability account balances of ABC Company as of December 31, 2020: 12% Notes Payable, P2,800,000; and 10% Notes Payable, P2,000,000. Transactions during 2021 and other information relating to ABC Company’s liabilities were as follows: (a) The 12% note is dated May 1, 2020 and is payable in four equal annual installments of P700,000 beginning May 1, 2021. The first principal and interest payment were made on May 1, 2021; (b) The 10%, P2,000,000 loan payable will mature on July 1, 2022. Interest on the loan is due every July 1 and December 31. On December 1, 2021, the company entered into a refinancing agreement with a bank to refinance the loan on long-term basis. The refinancing and roll-over transaction were completed on December 31, 2021; and (c) On January 1, 2021, the company purchased delivery equipment by paying cash of P200,000 and issuing a non-interest bearing note payable of P2,000,000 due in four equal annual installments starting December 31, 2021. The prevailing rate of interest of this type of note is 12%. 1.Total interest expense for the year 2021 is 2.The prevailing rate of interest of this type of note is 12%. Accrued interest payable as of December 31, 2021 is
The following liability account balances of ABC Company as of December 31, 2020: 12% Notes Payable, P2,800,000; and 10% Notes Payable, P2,000,000. Transactions during 2021 and other information relating to ABC Company’s liabilities were as follows: (a) The 12% note is dated May 1, 2020 and is payable in four equal annual installments of P700,000 beginning May 1, 2021. The first principal and interest payment were made on May 1, 2021; (b) The 10%, P2,000,000 loan payable will mature on July 1, 2022. Interest on the loan is due every July 1 and December 31. On December 1, 2021, the company entered into a refinancing agreement with a bank to refinance the loan on long-term basis. The refinancing and roll-over transaction were completed on December 31, 2021; and (c) On January 1, 2021, the company purchased delivery equipment by paying cash of P200,000 and issuing a non-interest bearing note payable of P2,000,000 due in four equal annual installments starting December 31, 2021. The prevailing rate of interest of this type of note is 12%.
1.Total interest expense for the year 2021 is
2.The prevailing rate of interest of this type of note is 12%. Accrued interest payable as of December 31, 2021 is
Step by step
Solved in 2 steps
