wner borrowed P4,000,000 in notes from the bank and paid of notes of P3,000,000 and interest of P240,000. Interest of P100,000 is accrued on December 31. There is no interest payable at the beginning of the year. Also, the owner

wner borrowed P4,000,000 in notes from the bank and paid of notes of P3,000,000 and interest of P240,000. Interest of P100,000 is accrued on December 31. There is no interest payable at the beginning of the year. Also, the owner

Name: Nagmahal Pero Nasaktan Company disclosed the following changes: 1. Cas
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Description: Nagmahal Pero Nasaktan Company disclosed the following changes: 1. Cash- P480,000 decrease 2. Accounts receivable- P300,000 increase 3. Merchandise inventory- P3,100,000 increase 4. Accounts payable- P420,000 increase During the year, the owner borro

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter7: Receivables And Investments

Section: Chapter Questions

Problem 7.17E

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Concept explainers

Financial Transaction Analysis

The transaction analysis is done with the help of the accounting equation. The basic accounting equation is alternatively known as the balance sheet equation is based on the double-entry system which says that for each transaction happening in a business, at least two accounts should be affected I.e. both the debit side and the credit side should be equal. The Accounting Equation is

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Question

Nagmahal Pero Nasaktan Company disclosed the following changes: 1. Cash- P480,000 decrease 2. Accounts receivable- P300,000 increase 3. Merchandise inventory- P3,100,000 increase 4. Accounts payable- P420,000 increase During the year, the owner borrowed P4,000,000 in notes from the bank and paid of notes of P3,000,000 and interest of P240,000. Interest of P100,000 is accrued on December 31. There is no interest payable at the beginning of the year. Also, the owner transferred certain investment in equity securities to the business and these were sold for P1,500,000 to finance purchase of merchandise. The owner made a weekly withdrawal of P10,000. If there are 52 weeks in a year, what is the net income for the current year?

P1,520,000

P420,000

P1,400,000

P1,920,000

Definition Definition Money that the business will be receiving from its clients who have utilized the credit provided to buy its goods and services. The credit period typically lasts for a short term, lasting from a few days, a few months, to a year.

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