On january 1, 2014, ABC Co. sold a mining equipment to surigao mining for 1,500,
ID: 2331515 • Letter: O
Question
On january 1, 2014, ABC Co. sold a mining equipment to surigao mining for 1,500,000 which ABC accepted a 10% , 3-year noe payable in three equal annual payments every December 31 starting in 2014.The interest is to be paid every end of the year. The cost of the equipment to ABC Co. was 500,000.prepared journal entry for all the transactions affecting the said sales of equipment on january 1, 2014 up to the time the note is fully paid on december 31, 2016 On january 1, 2014, ABC Co. sold a mining equipment to surigao mining for 1,500,000 which ABC accepted a 10% , 3-year noe payable in three equal annual payments every December 31 starting in 2014.The interest is to be paid every end of the year. The cost of the equipment to ABC Co. was 500,000.
prepared journal entry for all the transactions affecting the said sales of equipment on january 1, 2014 up to the time the note is fully paid on december 31, 2016
prepared journal entry for all the transactions affecting the said sales of equipment on january 1, 2014 up to the time the note is fully paid on december 31, 2016
Explanation / Answer
Answer
A
Amount of Note Payable
$ 1,500,000.00
B
No. of Installments
3
C =A / B
Annual amount of principal amount of installment
$ 500,000.00 [1500000 / 3]
Date
Beginning Balance
Interest at 10%
Principal payment
Total Installment to be received
Ending Balance
[A]
[B = A x 10%]
[C = $ 500,000]
[D = B + C]
[E = A - C]
Issued
$ 1,500,000.00
31-Dec-14
$ 1,500,000.00
$ 150,000.00
$ 500,000.00
$ 650,000.00
$ 1,000,000.00
31-Dec-15
$ 1,000,000.00
$ 100,000.00
$ 500,000.00
$ 600,000.00
$ 500,000.00
31-Dec-16
$ 500,000.00
$ 50,000.00
$ 500,000.00
$ 550,000.00
$ -
Date
Accounts title
Debit
Credit
01-Jan-14
Notes Receivable
$ 1,500,000.00
Equipment
$ 500,000.00
Gain on Sale
$ 1,000,000.00
(Equipment sold and Notes receivables accepted)
31-Dec-14
Cash
$ 650,000.00 [see Column ‘D’ above]
Interest revenue
$ 150,000.00 [see Column ‘B’ above]
Notes Receivables
$ 500,000.00
(1st installement received)
31-Dec-15
Cash
$ 600,000.00 [see Column ‘D’ above]
Interest revenue
$ 100,000.00 [see Column ‘B’ above]
Notes Receivables
$ 500,000.00
(2nd installement received)
31-Dec-16
Cash
$ 550,000.00 [see Column ‘D’ above]
Interest revenue
$ 50,000.00 [see Column ‘B’ above]
Notes Receivables
$ 500,000.00
(3rd and last installement received)
A
Amount of Note Payable
$ 1,500,000.00
B
No. of Installments
3
C =A / B
Annual amount of principal amount of installment
$ 500,000.00 [1500000 / 3]
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