Innovative Company manufactures and sells electrical generators. On September 1, 2013 the entity sold an electrical generator costing P700,000 for P1,200,000. The buyer paid P200,000 down and signed a P1,000,000 noninterest bearing note payable in four equal annual instalments every August 31. The company’s fiscal year ended every August 31 of every year.
The prevailing interest rate for a note of this type is 12 %.(Round off present value factors to 4 decimal places).
6. How much is the initial balance of the unearned interest income on September 1, 2013?
7. How much is the gain on sale of generator on September 1, 2013?
8. What is the carrying amount- current portion of the notes receivable as of August 31, 2014?
9. What is the carrying amount- noncurrent portion of the notes receivable as of August 31, 2015?
10. What is the ending balance of the unearned interest income as of August 31, 2015?