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Problem 1 Literal Company manufactures and sells electrical generators. On January 1, 2020, the entity sold an electrical generator costing P700,000 for P1,000,000. The buyer
Problem 1
Literal Company manufactures and sells electrical generators. On January 1, 2020, the entity sold an electrical generator costing P700,000 for P1,000,000. The buyer paid P100,000 down and signed a P900,000 noninterest-bearing note payable in three equal installments every December 31.
The prevailing interest rate for a note of this type i2 12%. The present value of an ordinary annuity of 1 for three periods is 2.4018.
Required:
- Prepare a amortization table (5 points)
- Prepare journal entries for the year 2020 (3 points)
- Compute the balance of notes receivable net of unearned interest income for the year-end 2021 (2 points)
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