Bahag-Hari company provided you the following sales transactions as of December 31,2021: · On January 1,2020, Bahag-Hari Company sold a Machinery for P5,000,000 to Orange Company. Orange Company paid P500,000 down and signed a noninterest-bearing note for the balance which is payable in 3 equal annual installments every December 31 of each year. The carrying value of the machinery is P5,700,00. · A notes receivable of P1,000,000 with a coupon rate of 12% from Pula Company was received from sale of goods in the normal course of business. The note is dated May 1,2021 and due on May 1,2024. Interests are collectible every May 1. · A three-year note of P200,000 with contract rate of 10% received from Dilaw Corporation dated January 1,2021 was accepted in exchange for consultation services rendered. The note is considered to have prevailing market rate 12%. Interest are collectible every December 31. The prevailing rate of interest for the above type of notes was 12%. Present value of P1 at 12% for three periods is 0.712. The present value of an ordinary annuity of 1 for three periods is 2.402. How much is the interest income for the year 2021 related to notes receivable from Pula Company? 56,960 120,000 85,440 80,000

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 23P: Notes Receivable On January 1, 2019, Lisa Company sold machinery with a book value of 118,000 to...

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Bahag-Hari company provided you the following sales transactions as of December 31,2021:

·        On January 1,2020, Bahag-Hari Company sold a Machinery for P5,000,000 to Orange Company. Orange Company paid P500,000 down and signed a noninterest-bearing note for the balance which is payable in 3 equal annual installments every December 31 of each year. The carrying value of the machinery is P5,700,00.

·        A notes receivable of P1,000,000 with a coupon rate of 12% from Pula Company was received from sale of goods in the normal course of business. The note is dated May 1,2021 and due on May 1,2024. Interests are collectible every May 1.

·        A three-year note of P200,000 with contract rate of 10% received from Dilaw Corporation dated January 1,2021 was accepted in exchange for consultation services rendered. The note is considered to have prevailing market rate 12%. Interest are collectible every December 31.

The prevailing rate of interest for the above type of notes was 12%. Present value of P1 at 12% for three periods is 0.712. The present value of an ordinary annuity of 1 for three periods is 2.402.

How much is the interest income for the year 2021 related to notes receivable from Pula Company?

56,960

120,000

85,440

80,000

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