On January 1, 2020, South Company acquired a building for P5,000,000. The entity paid P500,000 down and signed a noninterest bearing note for the balance which is payable in 3 equal annual installments every December 31 of each year. The prevailing interest rate for a note of this type is 12%. The present valueof an ordinary annuity of 1 for three periods is 2.4018. Required: Prepare Journal entries to record purchase of building on January 1, 2020, first installment payment on December 31, 2020 and interest for 2020.

On January 1, 2020, South Company acquired a building for P5,000,000. The entity paid P500,000 down and signed a noninterest bearing note for the balance which is payable in 3 equal annual installments every December 31 of each year. The prevailing interest rate for a note of this type is 12%. The present valueof an ordinary annuity of 1 for three periods is 2.4018. Required: Prepare Journal entries to record purchase of building on January 1, 2020, first installment payment on December 31, 2020 and interest for 2020.

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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