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Compute the unearned interest income

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Reference no: EM132960650

Question - ABC Co. sold an equipment costing P1,200,000 to one of its constituents for P1,400,000 last Jan 1, 2021. The buyer received P200,000 down-payment and signed a non-interest bearing note for the P1,200,000 remaining payable on Dec. 31, 2024.

The prevailing market rate of interest for this type of note is 12%.

*Round off your PV factors into 4 decimal places

* In computing the interest income, round off your answers to the nearest whole number.

Required -

1. Compute the unearned interest income.

2. Compute the gain on sale of equipment.

3. Prepare the journal entries from the year 2021 to 2024.

Reference no: EM132960650

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