J.What should have been the ENTRY to record the receiptof note from Company B on October 1, 2020?2-2Notes ReceivablesThe trial balance for BLUE Corporation prepared at December31, 2020 showed a balance of P4,000,000 for Notes Receivablesbroken as follows:Notes receivable from Company A3,000,0001,000,0004,000,000Notes receivable from Company BTotalAdditional information:The notes receivable from Company A is a three-year non-interest bearing note, with face value of P3,000,000. Thenote was received in exchange for a piece of land sold byBLUE on May 1, 2020. The land was carried in the books atthe date of sale at P2,600,000. The difference between theface amount of the note and the carrying value of the landwas credited to gain on sale of land. The market interestrate for a note of this type is 10%.The notes receivable from Company B bears interest at 10%.The note was received from sale of goods in the normalcourse of business. The note is dated October 1, 2020 andmatures on March 31, 2021No interest revenue has yet been recorded by BLUE during2020 on any of the notes mentioned above.

Note receivable: It is a written promise. The promise is for receiving specific amount of cash on…

Answered: to record the receipt What should have…

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to record the receipt What should have been the E of note from Company B on October 1, 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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Question

J.
What should have been the ENTRY to record the receipt
of note from Company B on October 1, 2020?
2-2
Notes Receivables
The trial balance for BLUE Corporation prepared at December
31, 2020 showed a balance of P4,000,000 for Notes Receivables
broken as follows:
Notes receivable from Company A
3,000,000
1,000,000
4,000,000
Notes receivable from Company B
Total
Additional information:
The notes receivable from Company A is a three-year non-
interest bearing note, with face value of P3,000,000. The
note was received in exchange for a piece of land sold by
BLUE on May 1, 2020. The land was carried in the books at
the date of sale at P2,600,000. The difference between the
face amount of the note and the carrying value of the land
was credited to gain on sale of land. The market interest
rate for a note of this type is 10%.
The notes receivable from Company B bears interest at 10%.
The note was received from sale of goods in the normal
course of business. The note is dated October 1, 2020 and
matures on March 31, 2021
No interest revenue has yet been recorded by BLUE during
2020 on any of the notes mentioned above.

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