Question

*Do not round any answer until your final answer. Round your final answer to the nearest whole dollar. When entering your final answer, do not use commas or $ sign. (Sorry...Canvas is very sensitive and will mark your answer incorrect due to rounding and punctuation.) Due to possible rounding differences, all answer solutions are programmed as acceptable that are +/- 1. For example, if the correct answer is $54,372, all possible answer solutions that would be accepted would be 54,371, 54372, and 54,373.

PV of $1	Periods	3	5	8	10	12	20
	2%	.94	.91	.85	.82	.79	.67
	4%	.89	.82	.73	.68	.62	.46
	6%	.84	.74	.63	.56	.50	.31
	8%	.79	.68	.55	.46	.39	.21
	9%	.77	.65	.50	.42	.36	.18
Present Value of an Ordinary Annuity
	2%	2.88	4.71	7.33	8.98	10.58	16.35
	4%	2.77	4.45	6.73	8.11	9.38	13.59
	6%	2.67	4.21	6.21	7.36	8.38	11.47
	8%	2.57	3.99	5.75	6.71	7.54	9.82
	9%	2.53	3.89	5.53	6.41	7.16	9.13

On January 1, 20x1, ABC rendered services to Smith Corporation and accepted a $200,000, 5 year note. In exchange, Smith agreed to make quarterly payments of P&I at the end of each Mar, Jun, Sept and Dec, with the first payment to be made on March 31, 20x1. An interest rate of 8% is imputed.  

Required: Use the information above to answer the next (4) questions:

1. Determine the amount of (1) PMT of P&I	$
2. What amount of Service Revenue should ABC recognize on January 1, 20x1?	$________________________________
3. What amount of Interest Revenue should ABC recognize on this note for the year ending December 31, 20x3? (Hint: Use the Short-cut method)	$________________________________
4. What is the Carrying Value of the Note Receivable at December 31, 20x2? (Hint: Use the short cut method)	$________________________________

Answer 1

1. Determine the amount of (1) PMT of P&I	$   12,232
2. What amount of Service Revenue should ABC recognize on January 1, 20x1?	$ 200,000
3. What amount of Interest Revenue should ABC recognize on this note for the year ending December 31, 20x3? (Hint: Use the Short-cut method)	$     9,174
4. What is the Carrying Value of the Note Receivable at December 31, 20x2? (Hint: Use the short cut method)	$ 129,341

Date	Interest	Installment	Deduction	Balance
January 1, 20x1				$   200,000.00
March x1	$   4,000.00	$ 12,232.42	$   8,232.42	$   191,767.58
June x1	$   3,835.35	$ 12,232.42	$   8,397.06	$   183,370.52
Sep x1	$   3,667.41	$ 12,232.42	$   8,565.01	$   174,805.51
Dec x1	$   3,496.11	$ 12,232.42	$   8,736.31	$   166,069.21
20x2
March x2	$   3,321.38	$ 12,232.42	$   8,911.03	$   157,158.18
June x2	$   3,143.16	$ 12,232.42	$   9,089.25	$   148,068.92
Sep x2	$   2,961.38	$ 12,232.42	$   9,271.04	$   138,797.89
Dec x2	$   2,775.96	$ 12,232.42	$   9,456.46	$   129,341.43
March x3	$   2,586.83	$ 12,232.42	$   9,645.59	$   119,695.84
June x3	$   2,393.92	$ 12,232.42	$   9,838.50	$   109,857.34
Sep x3	$   2,197.15	$ 12,232.42	$ 10,035.27	$     99,822.07
Dec x3	$   1,996.44	$ 12,232.42	$ 10,235.97	$     89,586.10
	$   9,174.33