Question

Pina Colada Corp. had the following long-term receivable account balances at December 31, 2016.

Notes receivable - Sale of division		$1,809,000
Notes receivable - Employees		399,000

Transactions during 2017 and other information relating to Pina's long-term receivables were as follows:

1.		The $1,809,000 note receivable is dated May 1, 2016, bears interest at 8%, and represents the balance of the consideration received from the sale of Pina's electronics division to Blossom Company. Principal payments of $603,000 plus appropriate interest are due on May 1, 2017, 2018, and 2019. The first principal and interest payment was made on May 1, 2017. Collection of the note instalments is reasonably assured.
2.		The $399,000 note receivable is dated December 31, 2016, bears interest at 7%, and is due on December 31, 2019. The note is due from Marcia Cumby, president of Pina Colada Corp., and is secured by 11,600 Pina's common shares. Interest is payable annually on December 31, and the interest payment was made on December 31, 2017. The quoted market price of Pina's common shares was $40 per share on December 31, 2017.
3.		On April 1, 2017, Pina's sold a patent to Sunland Company in exchange for a $201,000 non–interest-bearing note due on April 1, 2019. There was no established exchange price for the patent, and the note had no ready market. The prevailing rate of interest for a note of this type at April 1, 2017, was 12%. The present value of $1 for two periods at 12% is 0.79719 (use this factor). The patent had a carrying amount of $41,300 at January 1, 2017, and the amortization for the year ended December 31, 2017 would have been $7,300. The collection of the note receivable from Sunland is reasonably assured.
4.		On July 1, 2017, Pina's sold a parcel of land to Kingbird Inc. for $201,500 under an instalment sale contract. Kingbird made a $52,500 cash down payment on July 1, 2017, and signed a four-year, 12% note for the $149,000 balance. The equal annual payments of principal and interest on the note will be $49,056, payable on July 1, 2018, through July 1, 2021. The land could have been sold at an established cash price of $200,000. The cost of the land to Pina's was $141,000. Collection of the instalments on the note is reasonably assured.
5.		On August 1, 2017, Pina's agreed to allow its customer, Saini Inc., to substitute a six-month note for accounts receivable of $200,000 it owed. The note bears interest at 6% and principal and interest are due on the maturity date of the note.

Determine the amount of interest income that should be reported in 2017. (Do not round intermediate calculations. Round answers to 0 decimal places, e.g. 8,971.)

Determine the portion of the note and any interest that should be reported in current assets at December 31, 2017.

Determine the portion of the note that should be reported as a long-term investment at December 31, 2017.

Prepare a schedule showing the current portion of the long-term receivables and accrued interest receivable that would appear in Pina's statement of financial position at December 31, 2017.

Determine the total interest income from the long-term receivables that would appear on Pina's income statement for the year ended December 31, 2017.

Total interest income for year ended 12/31/17

Answer 1