Company as of December 31, 2021:Case 4Cefollowing information pertains to a note payable issued by LatteNote payable from purchase of machineryOn April 1, 2020, Latte purchased a machinery by paying P500,000 andissued P3,000,000, 5% note payable in four years. The note is payable inseries of payments every April 1 starting 2021 as follows:April 1, 2021April 1, 2022April 1, 2023P1,500,0001,000,000500,000Interest on this note is payable every April 1 of each year based onoutstanding balance of the note. The effective interest when the note wasissued on April 1, 2020 is 7%.Your test of journal entries revealed the following entries in 2020 and 2021in relation to your audit of the notes payable:Entry made on April 1, 2020 when the machine was purchased:MachineryNote payableCash3,500,0003,000,000500,000 Chapter 3: Audit of Non-Current LiabilitiiesEntry made on December 31, 2020:Interest expenseInterest payable112,500112,500Entry made on April 1, 2021, when the payment is made:Notes payableInterest payableInterest expenseCash1,500,000112,50037,5001,650,000The note payable was reported in its December 31, 2021 statement offinancial position in non-current liability section at P1,500,000.Determine the following as a result of your audit:1. How much is the correct carrying value of the note payable as ofDecember 31, 2021?2. How much is the correct interest expense that Latte recognized in thestatement of comprehensive income for the period ending December31, 2021?3. How much of the note is reported in the current liability section in itsDecember 31, 2021 statement of financial position?4. How much of the note is reported in the non-current liability section inits December 31, 2021 statement of financial position?5. What is your proposed adjusting journal entry (PAJE) as a result of youraudit as of December 31, 2021?

Financial liabilities that are held for trading are measured at Fair Value through Profit and Loss.…

Determine the following as a result of your audit: 1. How much is the correct carrying value of the note payable as of December 31, 2021? 2. How much is the correct interest expense that Latte recognized in the statement of comprehensive income for the period ending December 31, 2021? 3. How much of the note is reported in the current liability section in its December 31, 2021 statement of financial position? 4. How much of the note is reported in the non-current liability section in its December 31, 2021 statement of financial position? 5. What is your proposed adjusting journal entry (PAJE) as a result of your audit as of December 31, 2021?

Determine the following as a result of your audit: 1. How much is the correct carrying value of the note payable as of December 31, 2021? 2. How much is the correct interest expense that Latte recognized in the statement of comprehensive income for the period ending December 31, 2021? 3. How much of the note is reported in the current liability section in its December 31, 2021 statement of financial position? 4. How much of the note is reported in the non-current liability section in its December 31, 2021 statement of financial position? 5. What is your proposed adjusting journal entry (PAJE) as a result of your audit as of December 31, 2021?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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