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  Intermediate Accounting 2 NOTES PAYABLE (cont)  PROBLEM #1 On January 1, 2016, North Company acquired a machinery with cash price of P750,000 for P1,000,000.The entity paid P200,000 and signed a noninterest bearing promissory note for the balance which is payable in 4 equal instalments every December 31 each year REQUIRED: Prepare journal entries for 2016  PROBLEM #2 On January 1 2016, South Company acquired building for P5,000,000. The entity paid P500,000 down and signed a noninterest bearing note for the balance which is payable in 3 equal annual instalments every December 31 of each year.The prevailing interest rate for a note of this type is 12%. The present value of an ordinary annuity of 1 for 3 periods is 2.4018. REQUIRED: Prepare journal entries to record purchase of building on January 1, 2016, first instalment payment & interest expense on December 31, 2016.  PROBLEM #3 On Jan 1, 2016, Manila Company acquired a tract of land for P5,250,000. The entity paid P1,250,000 down and signed a noninterest bearing note for the balance which is due in Jan 1 2019.There was no established exchange price for the land and the note had no ready market. The prevailing interest rate for this type of note was 12%. The present value of 1 at 12% for 3 periods is .7118. REQUIRED: Prepare journal entries to record the purchase of land on Jan 1, 2016, interest expense for 2016 and full payment of the note on Jan 1, 2019.
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