Required:

Prepare journal entries for 2022, 2023, 2024.

2022
Jan. 1 Cash 1,000,000
Note receivable 6,000,000
Land 5,000,000
Gain on sale of land 2,000,000
To record down payment.

Accrued Interest receivable 720,000

Interest Income 720,000
To record accrued interest for the year.

2023
Accrued Interest receivable 806,400
Interest Income 806,400
To record accrued interest for the year.

Face amount 6,000,000

Interest accrued for first year 720,000
Total 6,720,000
Interest for second year 806,400

2024
Cash 8,429,568
Note Receivable 6,000,000
Accrued interest receivable 1,526,400
Interest income 903,168
To record cash collected.

Face amount 6,000,000

Interest accrued:
First year 720,000
Second year 806,400 1,526,400
Total 7,526,400
Interest for third year 903,168
Cash received 8,429,568
Required:
Prepare journal entries for the current year.
Face amount of note 600,000
Present value - cash sale price 540,000
Unearned interest income 60,000

Cash sale price 540,000

Cost of equipment 400,000
Gross income 140,000

Journal Entries
Jan. 1 Notes Receivable
Sales
Unearned interest income
To record the sale.

Dec. 31 Cash
Notes Receivable
To record first intallment collection.

Unearned interest income

Interest income
To record unearned interest income over the term of the note.

Note Receivable Fraction

2022 600,000 3/6
2023 400,000 2/6
2024 200,000 1/6
1,200,000
 600,000
540,000
60,000

200,000
200,000

30,000
30,000

Interest Income
30,000
20,000
10,000
60,000
Required:
Prepare journal entries for the current year.
Face amount of note 900,000
Present value of note 720,540
Unearned interest income 179,460

Present value of note 720,540

Cash received - down payment 100,000
Sale price 820,540
Cost of equipment 700,000
Gain on sale of equipment 120,540

Journal Entries
2022
Jan. 1 Cash 100,000
Note Receivable 900,000
Equipment 700,000
Gain on sale of equipment 120,540
Unearned interest income 179,460
To record the sale of equipment.

Dec. 31 Cash 300,000

Note receivable 300,000
To record first installment collection.

Unearned interest income 86,465

Interest inome 86,465
To record interest income.

Date Annual Collection Interest Income Principal Present Value

Jan. 1, 2022 720,540
Dec. 31, 2022 300,000 86,464.80 213,535 507,005
Dec. 31, 2023 300,000 60,841 239,159 267,845
Dec. 31, 2024 300,000 32,141 267,859
 2023
Dec. 31 Cash 300,000
Note receivable 300,000
To record second annual collection.

Unearned interest income 60,841

Interest inome 60,841
To record interest income.

2024
Dec. 31 Cash 300,000
Note receivable 300,000
To record third annual collection.

Unearned interest income 32,141

Interest inome 32,141
To record interest income.
Required:
Prepare journal entries for 2022 and 2023
Face amount of note 2,500,000
Present value of note 1,995,000
Unearned interest income 505,000

2022
Jan. 1 Note Receivable 2,500,000
Sales 1,995,000
Unearned interest income 505,000
To record the sale of equipment.

Date Annual Collection Interest Income Principal Present Value

Jan. 1, 2022 1,995,000
Dec. 31, 2023 500,000 159,600.00 340,400 1,654,600
Dec. 31, 2024 500,000 132,368.00 367,632 1,286,968
Dec. 31, 2025 500,000 102,957.44 397,043 889,925
Dec. 31, 2026 500,000 71,194.04 428,806 461,119
Dec. 31, 2027 500,000 36,889.56 463,110 (1,991)

2023
Dec. 31 Cash 500,000
Note Receivable 500,000
To record first installment collection.

Unearned interest income 132,368

Interest income 132,368
To record interest income.

Determine the carrying amount of the note receivable on December 31, 2023.
The carrying amount of the note receivable on December 31, 2023 is P1,654,600.

Note Receivable 1,995,000

Unearned interest income 340,400
Carrying Amount 1,654,600
Determine the interest income for 2024.
The interest income on December 31, 2023 is P132,368.

Interest income (1,654,600*8%) 132,368

Required:
Prepare journal entries for 2022, 2023, 2024, and 2025.
Face amount of note 400,000
Present value 284,720
Unearned interest income 115,280

Computation
Present value of note 284,720
Cash received 125,000
Sale price 409,720
Carrying amount of equipment 350,000
Gain on sale of equipment 59,720

2022
Jan. 1 Cash 125,000
Note Receivable 400,000
Accumulated Depreciation 150,000
Equipment 500,000
Gain on sale of equipment 59,720
Unearned interest income 115,280
To record sale of equipment.

Dec. 31 Unearned interest income 34,166

Interest income 34,166
To record interest income.

Date Interest Income Unearned Interest Income Present Value

Jan. 1, 2022 115,280 284,720
Dec. 31, 2022 34,166 81,114 318,886
Dec. 31, 2023 38,266 42,847 357,153
Dec. 31, 2024 42,858 (11) 400,011
Dec. 31, 2025 48,001 (48,012) 448,012

2023
Dec. 31 Unearned interest income 38,266
Interest income 38,266
To record interest income.

2024
Dec. 31 Unearned interest income 42,858
Interest income 42,858
To record interest income.

2025
Jan. 1 Cash 400,011
Note Receivable 400,011
To record collection of note receivable.