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Prepare the journal entries from the year

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Reference no: EM132963411

Question - ABC Co. sold an equipment purchased at P1,250,000 with recorded accumulated depreciation at P375,000 to one of its constituents for P1,150,000 last Jan 5, 2021.

The buyer signed a non interest bearing note for the P1,150,000 payable in 5 equal annual installments every January 5 and paid immediately the 1st installment upon sale.

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 2025.

Reference no: EM132963411

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