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What is the cost of the equipment to be recorded

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Question - Notes payable - You were auditing the borrowings of Faith Logistics Corporation for the year ended December 31, 2022. You were able to not the following transaction in your review of the company's records:

On August 1, 2022, the company acquired a service vehicle for a total cash price of P650,000 with Alpha Automobile Trading Company.

The terms involved a deferred payment arrangement on the purchase of the service vehicle with Faith paying a down payment of P150,000 and a five-year note payable of P626,140. The note is payable in five (5) equal installments of P125,228 payable beginning August 1, 2023. The annual payments include 8% interest.

Based on the given information and the result of your audit, answer the following questions:

1. What is the cost of the equipment to be recorded by Faith Logistics Corporation on August 1, 2022?

2. What is the carrying amount of the note payable on December 31, 2022?

3. How much is the interest expense to be reported by the company for the year ended December 31, 2022?

4. How much is the amount attributable to the principal portion of the note on the payment made on August 1, 2023?

5. How much is the interest expense to be reported by the company for the year ended December 31, 2023?

Reference no: EM133166784

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