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Question 1

For items 1 to 2

Monday Company sold a plot of land that had originally cost P800,000 on January 1, 2021. As payment, the company received a P1,200,000 note. It has a 4% interest rate and is payable in three annual installments of P400,000 plus interest on the outstanding amount. 10% is the prevailing rate of interest on this note. The following present value factors of 1 at 10% are shown in the present value table:

Present value factor of 1 for 3 periods 0.75132 Present value factor of 1 for 2 periods 0.82645 Present value factor of 1 for 1 period 0.90909 Present value of an ordinary annuity of 1 for 3 periods 2.48685Historical Cost P5,000,000 Estimated Selling Price 4,500,000 Expected Selling Price 4,700,000 Cost to Complete and Sell 250,000 Replacement Cost 4,000,0002020 2021 Inventory, Jan. 1 PO P204,000 Purchases 860,000 692,000 Purchase returns and allowances 46,120 64,600 Sales 788,000 836,000 Sales returns and allowances 16,000 20,000