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Topics Covered: Notes and Loans Receivable
Problem 1: On Jan. 1, 2020, ABC Inc. received a 3-year, 5%-interest P3,000,000 note for a loan provided to its officer. Interest is collectible annual every Jan. 1, starting 2021 while the principal is due on the maturity date. The prevailing interest rate for similar notes is 7%. What is the adjusting journal entry on Dec. 31, 2020?
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