Question
1. ABC Corp received $100,000 of 8% term note receivable on January 1, 2017, due on January 1, 2022, with interest receivable each July 1
1. ABC Corp received $100,000 of 8% term note receivable on January 1, 2017, due on January 1, 2022, with interest receivable each July 1 and January 1. Market interest rate for the borrower is 10%. Calculate the present value and complete the amortization table.
- Face value: 100,000
- Stated interest rate: 8% - Market interest rate: 10% - 5 years, semi-annual interest payments
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| Cash | Interest Rev | Amortization (Premium or Discount) | Carrying amount of Note |
| Date of issuance | -- | -- | -- |
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| 2017 Jul 1 |
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| 2018 Jan 1 |
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| 2018 Jul 1 |
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| 2019 Jan 1 |
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| 2019 Jul 1 |
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| 2020 Jan 1 |
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| 2020 Jul 1 |
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| 2021 Jan 1 |
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| 2021 Jul 1 |
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| 2022 Jan 1 |
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- Journal entry on the date of issuance (cash payment, recognition of note receivable)
- Journal entry on 7/1 for recording interest receivable.
- Journal entry on 12/31 for recording interest receivable.
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Loose Leaf For Financial Accounting Fundamentals
Authors: John Wild, Ken Shaw, Barbara Chiappetta
6th Edition
1260151980, 978-1260151985
