Problem 3: (Day 1 Difference)

On January 1, 2018, Dam Co. extended a P1,000,000, zero-interest loan to one of its directors. The loan
matures on January

1, 2021. The prevailing interest rate for this type of loan is 10% (Use two decimal places for present
value factors)

1. Compute the present value of the loan.

YRS 3

INTEREST RATE 0.1

FUTURE VALUE ₱1,000,000.00

PRESENT VALUE (₱43,149.81) excel from formula present value factors

₱751.31

₱751,314.80

2. Assuming the loan proceeds is P900,000, prepare the journal entry on January 1, 2018.

Record Loan Interest

Cash ₱900,000.00

Loan liability 900,000

Record Interest Payments

Interest Payable

Cash