Problem 7-6 (IAA)

Kalibo Bank loaned P5,000,000 to Caticlan Company on January 1, 2023. The terms of the loan require principal payments of P1,000,000 each year for 5 years plus interest at 8%.

The first principal and interest payment is due on January 1, 2024. Caticlan Company made the required payments during 2024 and 2025. However, during 2025 Caticlan Company began to

experience financial difficulties, requiring Kalibo Bank to

reassess the collectibility of the loan. On December 31, 2025, Kalibo Bank has determined that the remaining principal payment will be collected but the collection of the interest is unlikely. Kalibo Bank did not

The PV of 1 at 8% is .93 for one period, .86 for two periods and 79 for three periods.

accrue the interest on December 31, 2025.

Prepare all journal entries from 2023 to 2028