On June 1, 2017, Santos Furniture Co. borrowed P5,000,000 (face value) from Sonic Co., a major customer, through a non-interest-bearing note due in 4 years. Because the note was non-interest-bearing, Santos Furniture agreed to sell furniture to this customer at lower than market price. A 10% rate of interest is normally charged on this type of loan. Prepare the journal entry to record this transaction and determine the amount of interest expense to report for 2017.
On June 1, 2017, Santos Furniture Co. borrowed P5,000,000 (face value) from Sonic Co., a major customer, through a non-interest-bearing note due in 4 years. Because the note was non-interest-bearing, Santos Furniture agreed to sell furniture to this customer at lower than market price. A 10% rate of interest is normally charged on this type of loan. Prepare the journal entry to record this transaction and determine the amount of interest expense to report for 2017.
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
Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable
Section: Chapter Questions
Problem 12P: Hamlet Corporation purchases computer equipment at a price of 100,000 on January 1, 2019, paying...
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