Pr.

6-1 Feasible Company

DEBIT CREDIT
JAN 1 CASH ₱ 1,000,000
NOTES RECEIVABLE 6,000,000
LAND ₱ 5,000,000
GAIN ON SALE OF LAND 2,000,000
To record sale of Land.

DE 31 ACCRUED INTEREST INCOME 720,000

C
INTEREST INCOME 720,000
(6,000,000 X 12% = 720,000)

Entry for the First Year (2020)

Entry for the Second Year (2021)

DEBIT CREDIT
DEC 31 ACCRUED INTEREST INCOME ₱ 806,400
INTEREST INCOME ₱ 806,400
(6,720,000 X 12% = 806,400)

Entry for the Third Year (2022)

DEBIT CREDIT
DEC 3 CASH ₱ 7,526,400
1
NOTES RECEIVABLE ₱ 6,000,000
ACCRUED INTEREST INCOME 1,526,400

(6,000,000+1,526,400 = 7,526,400)
(702,000 + 806,400 = 1,526,400)
Pr. 6-2 Bygone Company

202 DEBIT CREDIT

0
JAN 1 NOTES RECIEVABLE ₱ 600,000
SALES ₱ 540,000
UNEARNED INTEREST INCOME 60,000
To record sale.

DE 31 CASH 200,000
C
NOTES RECIEVABLE 200,000
To record first installment collection.

UNEARNED INTEREST INCOME 30,000

INTEREST INCOME 30,000
To record interest income over the term.

COMPUTATIONS:
Face Value of Notes ₱ 600,000
Present Value – cash sale price (540,000)
Unearned Interest Income ₱ 60,000

Cash Sale Price ₱ 540,000

Cost of Computer 400,000
Gross Income ₱ 140,000

YEAR NOTE FRACTION INTEREST

RECIEVABLE INCOME
2020 600,000 6/12 30,000
2021 400,000 4/12 20,000
2022 200,000 2/12 10,000
1,200,000 60,000
Pr. 6-3 Innovative Company
2020 DEBIT CREDIT
JAN 1 CASH ₱ 100,000
NOTES RECEIVABLE 900,000
ELECTRONIC GENERATORS ₱ 820,540
UNEARNED INTEREST INCOME 179,460
To record sale.

DEC 3 CASH 300,000

1
NOTES RECEIVABLE 300,000
To record first installment collection.

UNEARNED INTEREST INCOME

COMPUTATIONS:
Face Value ₱ 900,000
Present Value (300,000 X 2.4018) (720,540)
Unearned Interest Income ₱ 179,460

Present Value ₱ 720,540

Cash Received – Down Payment 100,000
Sale Price ₱ 820,540
Cost of Electrical Generators (700,000)
Gain on Electrical Generators ₱ 120,540

DATE ANNUAL INTEREST PRINCIPLE PRESENT

COLLECTION INCOME VALUE
JAN. 1, 2020 720,540
DEC. 300,000 86,465 213,535 507,005
31,2020
DEC. 300,000 60,841 239,159 267,846
31,2021
DEC. 300,000 32,154 267,846 -
31,2022