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What is the total interest expense for the year

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Reference no: EM132930392

Question - Sibulan Corporation's financial statements for the year 2018 were presented and you noted the following liability account balances as of December 31, 2017:

12% Notes payable P2,800,000

10% Notes payable 2,000,000

Transactions during 2018 and other information relating to Sibulan's liabilities were as follows:

a) The 12% note is dated May 1, 2017 and is payable in four equal annual installments of P700,000 beginning May 1, 2018. The first principal and interest payment were made on May 1, 2018.

b) The 10%, P2,000,000 loan payable will mature on July 1, 2019. Interest on the loan is due every July 1 and December 31. On December 1, 2018, the company entered into a refinancing agreement with a bank to refinance the loan on a long-term basis. The refinancing and roll over transaction were completed on December 31, 2018.

c) On January 1, 2018, The Company purchased delivery equipment by paying cash of P200,000 and issuing a noninterest-bearing note payable of P2,000,000 due in 4 equal annual installments starting December 31, 2018. The prevailing rate of interest of this type of note is 12%.

Based on the above data, determine the following:

1. How much is the carrying amount of the note issued for delivery equipment on initial recognition?

A. P2,000,000

B. P1,271,000

C. P1,518,650

D. P2,200,000

2. What is the noncurrent portion of the notes payable as of December 31, 2018?

A. P3,627,987

B. P5,600,000

C. P4,400,000

D. P4,244,595

3. What is the current portion of notes payable as of December 31, 2018?

A. P763,573

B. P988,974

C. P1,055,893

D. P1,100,000

4. What is the accrued interest payable as of December 31, 2018?

A. P200,000

B. P224,000

C. P168,000

D. P176,000

5. What is the total interest expense for the year 2018?

A. P352,327

B. P618,238

C. P662,238

D. P268,000

Reference no: EM132930392

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