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What effect did the credit accounting for the note

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Problem 1: At the beginning of 2019, Evans Company received a three-year zero-interest-bearing P600,000 note receivable for merchandise sold. The market rate for equivalent notes was 8% at that time. Evans reported this note as charge to notes receivable and a credit to sales revenue for P600,000. What effect did this credit accounting for the note have on Evan's profit for 2019, 2020, 2021, and its retained earnings at the end of 2021, respectively?

a. Overstate, understate, understate, understate
b. Overstate, overstate, overstate, overstate
c. Overstate, overstate, understate, no effect
d. Overstate, understate, understate, no effect

Reference no: EM132831019

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