On January 1, 20x1, an entity issued a noninterest-bearing note of P1,200,000 in exchange for land. The note is due in three equal annual installments every December 31. The effective interest rate is 17%.RequirementsProvide all the entries during the term of the note.Compute for the current and non current portions of the note on December 31, 20x1 and the amount of “Discount on notes payable” allocated to each portion.

Notes payable refer to the long-term obligations of the company to repay the sum from the money owed…

Answered: On January 1, 20x1, an entity issued a…

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter14: Long-term Liabilities: Bonds And Notes

Section: Chapter Questions

Problem 11E

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On January 1, 20x1, an entity issued a noninterest-bearing note of P1,200,000 in exchange for land. The note is due in three equal annual installments every December 31. The effective interest rate is 17%.

Requirements

Provide all the entries during the term of the note.
Compute for the current and non current portions of the note on December 31, 20x1 and the amount of “Discount on notes payable” allocated to each portion.

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