Question
In: Accounting
Stickleback performed services for a customer in exchange for a $18,000, 5 year, 10% note receivable...
Stickleback performed services for a customer in exchange for a $18,000, 5 year, 10% note receivable on January 1, 2020. Interest will be paid quarterly, with the first payment at the end of the first quarter. The customer’s normal borrowing rate is 12%.
Determine the balance in the discount on note receivable as of December 31, 2023.
|
$2,007 |
||
|
$334 |
||
|
None of the other answer choices is correct. |
||
|
$632 |
||
|
$1,130 |
||
|
$5,194 |
||
|
$17,665 |
Solutions
Expert Solution
PV Factor @2.5% for 20 periods = 0.5537
PV Annuity @3% for 20 periods = 14.8775
Carrying Value of Bonds on Jan 1, 2020 = $18000 x 0.5537 +
$18000 x 10% x 3/12 x 14.8775 = $16661
Discount on Bonds = $18000-16661 = $1339
| Periods | Payment | Interest | Discount Amortized | Carrying Value |
| 0 | $ 16,661 | |||
| 1 | $ 450 | $ 500 | $ 50 | $ 16,711 |
| 2 | $ 450 | $ 501 | $ 51 | $ 16,762 |
| 3 | $ 450 | $ 503 | $ 53 | $ 16,815 |
| 4 | $ 450 | $ 504 | $ 54 | $ 16,869 |
| 5 | $ 450 | $ 506 | $ 56 | $ 16,926 |
| 6 | $ 450 | $ 508 | $ 58 | $ 16,983 |
| 7 | $ 450 | $ 509 | $ 59 | $ 17,043 |
| 8 | $ 450 | $ 511 | $ 61 | $ 17,104 |
| 9 | $ 450 | $ 513 | $ 63 | $ 17,167 |
| 10 | $ 450 | $ 515 | $ 65 | $ 17,232 |
| 11 | $ 450 | $ 517 | $ 67 | $ 17,299 |
| 12 | $ 450 | $ 519 | $ 69 | $ 17,368 |
| 13 | $ 450 | $ 521 | $ 71 | $ 17,439 |
| 14 | $ 450 | $ 523 | $ 73 | $ 17,512 |
| 15 | $ 450 | $ 525 | $ 75 | $ 17,588 |
| 16 | $ 450 | $ 528 | $ 78 | $ 17,665 |
Discount on note as of Dec 31, 2023 = $18000 - 17665 = $335
Answer is b. $334
ekkarill92 answered 2 years agoRelated Solutions
Bento Corp took a $500,000 four-year 4% note receivable from a customer in connection with a...
Bento Corp took a $500,000 four-year 4% note receivable from a
customer in connection with a major sale transaction. The note
requires annual blended payment s to be paid at end of each year.
The market interest rate is 4%.
1. Calculate the required blended payment. round to the nearest
dollar.
2. Prepare a schedule that shows annual interest and the
principal portion of the four payments.
3. Prepare journal entries to record the initial sale
transaction and each payment.
Selkirk Company obtained a $30,000 note receivable from a customer on January 1, 2018. The note,...
Selkirk Company obtained a $30,000 note receivable from a
customer on January 1, 2018. The note, along with interest at 12%,
is due on July 1, 2018. On February 28, 2018, Selkirk discounted
the note at Unionville Bank. The bank’s discount rate is 14%.
Required:
Prepare the journal entries required on February 28, 2018, to
accrue interest and to record the discounting for Selkirk. Assume
that the discounting is accounted for as a sale. (If no
entry is required for...
On 12/31/19 we sign a 3-year note receivable for $50,000 in payment for services that we...
On 12/31/19 we sign a 3-year note receivable for $50,000 in
payment for services that we provided to a client. This amount does
not include interest. Annual year-end payments $20,106 begin on
12/31/20. The payments include both principal and interest at
10%.
Prepare an amortization table
Prepare the journal entry for 12/31/19
Prepare the journal entry for 12/31/20
Prepare the journal entry for 1/1/21
Prepare the journal entry for 1/1/22
On 12/31/19 we sign a 3-year note receivable for $50,000 in payment for services that we...
On 12/31/19 we sign a 3-year note receivable for $50,000 in
payment for services that we provided to a client. This amount does
not include interest. Annual year-end payments $20,106 begin on
12/31/20. The payments include both principal and interest at
10%.
Prepare an amortization table
Prepare the journal entry for 12/31/19
Prepare the journal entry for 12/31/20
Prepare the journal entry for 1/1/21
Prepare the journal entry for 1/1/22
Blair Automotive performed mechanic services for two customers. The first customer owed $5,280 for services, so...
Blair Automotive performed mechanic services for two customers.
The first customer owed $5,280 for services, so Blair Automotive
made them sign a written promise to pay in full after six months
with an annual interest rate of 3.5%. The second customer owed $326
for services, so Blair Automotive plans to send them a bill within
the next two weeks, due within 30 days of receipt of the bill. What
is the difference between these two transactions?
On January 1, 2019, FLOWERS Inc. rendered services in exchange for a four-year promissory note having...
On January 1, 2019, FLOWERS Inc. rendered services in exchange
for a four-year promissory note having a face value of $10,000.
Interest at a rate of 3% is payable annually on January 1 (first
payment
Jan 1, 2020). The customer has credit ratings that require it to
borrow money at 8% interest.
FLOWERS uses IFRS.
Required: Show and label all calculations.
(Round to the nearest dollar.)
What would be the value of the service revenue recorded on
January 1, 2019?...
On January 1, 2019, FLOWERS Inc. rendered services in exchange for a four-year promissory note having...
On January 1, 2019, FLOWERS Inc. rendered services in exchange
for a four-year promissory note having a face value of $10,000.
Interest at a rate of 3% is payable annually on January 1 (first
payment Jan 1, 2020). The customer has credit ratings that require
it to borrow money at 8% interest. FLOWERS uses IFRS. Required:
Show and label all calculations. (Round to the nearest dollar.)
What would be the value of the service revenue recorded on
January 1, 2019?...
On Jan 1st, 2014, Xena Inc. provided services in exchange for a 2-year $100,000, 8% note...
On Jan 1st, 2014, Xena Inc. provided services in exchange for a
2-year $100,000, 8% note receivable that pays interest quarterly on
March 31st, June 30th , September 30th and Dec 31st. The customer’s
normal borrowing rate (market rate) is 12%.
On, Jan 1st, 2014, the carrying value of the note receivable is
$___________ Round to the nearest dollar
a.Prepare a well-labeled schedule (with debits/credits shown)
for the journal entries through the life of the Note.
b.Prepare the original Journal...
Tallcrest discounted a $50,000, 45-day, 5% note receivable on August 10 at the local bank, which...
Tallcrest discounted a $50,000, 45-day, 5% note receivable on
August 10 at the local bank, which applies an 8% discount rate.
Tallcrest had held the note for 25 days before discounting it.
Record the entry on August 10.
These financial statement items are for Fairview Corporation at
year-end, July 31, 2017. Salaries and wages payable
................................... $ 2,080 Salaries and wages
expense ................................... 57,500 Supplies expense
............................................... 15,600 Equipment
...................................................... 18,500
Accounts payable .............................................
4,100 Service revenue
................................................ 66,100 Rent...
Bosworth Corporation accepted a 5-year note receivable from Steelman Company on January 1, Year 1. The...
Bosworth Corporation accepted a 5-year note receivable from
Steelman Company on January 1, Year 1. The maturity value of the
note is $ 760,000. The note has a stated interest rate of 10%.
However, the prevailing market interest rate is 12%. The note
requires interest payments on June 30 and December 31. What is the
present value of this note at inception ANSWER:$704, 063 ( I would
like to know how to calculate)
2. Eagle Exporters purchased 80,000 of the...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Your friend is looking for investors in a risky business venture. To convince you to participate,...
- Suppose you observe the following situation: State of Economy Probability of State Return if State Occurs...
- Merger Analysis TransWorld Communications Inc., a large telecommunications company, is evaluating the possible acquisition of Georgia...
- Journal Entries and Trial Balance Elite Realty acts as an agent in buying, selling, renting, and...
- In racket Assume that the elements of a list are indexed starting with 1. Write a...
- Describe System Development Life Cycle (SDLC) and how it is used.
- What symbolism do you find in the play,Oedipus?
ADVERTISEMENT