Textbook Question

On January 1, Song Corp. receives a $100,000, two-year, note receivable from a customer in exchange for payment of goods. The note has a 12% effective interest rate. On January 1, when Song receives the note from the customer, Song will record (Select all that apply.) Note: you must use present value computations to answer this questions.

Textbook Answer

Note Receivable (debit) 100,000

Discount on Note Receivable (credit) 20,281

Sales Revenue (credit) 79,719

I know that Sales Revenue is the difference between the Note Receivable and the Discount on Note Receivable.

HOW DO YOU FIND THE DISCOUNT ON NOTE RECEIVABLE FOR THIS QUESTION USING THE TVM BUTTONS ON A FINANCIAL CALCULATOR? Please provide the exact input and then the reason why.

N =

I/Y =

PV =

PMT =

FV =