Ann Demas loaned $230,896 to Joe Smith on January 1, 2020. A zero-interest-bearing note (face amount, $275,000) was exchanged solelyfor cash; no other rights or privileges were exchanged. The note is to be repaid in three years on December 31, 2022. The prevailing rate ofinterest for a loan of this type is 6%. The present value of $275,000 at 6% for three years is $230,896. At December 31, 2021, the balance ofof the Discount on Note Payable account would be(round to whole dollars)Answer:

The balance of discount on Note Payable account is the discounted amount of the face value of the…

Answered: Ann Demas loaned $230,896 to Joe Smith…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Similar questions

Parton owes $3 million that is due on March 5, 2021. The company borrows $2,600,000 on February 25, 2021(5-year note) and uses the proceeds to pay down the $3 million note. How much of the $3 million note is classified as long-term in the February 28, 2021 financial statements?
LINDT Corporation manufactures and sells electrical generators. On May 31, 2020, it sold an electrical generator costing ₱ 700,000 for ₱ 1,000,000. The buyer paid ₱100,000 down and signed a ₱ 900,000 non-interest bearing note payable in three equal installments starting May 31, 2021. Assume the prevailing interest rate for a note of this type is 12%. The present value of an ordinary annuity of 1 for three periods is 2.4018. How much is the Interest income for the year ending December 31, 2021?
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. On April 30, 2022, Lenny Inc. borrowed $10 million cash from Colonial Bank and issued a 5-month, noninterest-bearing note, priced to yield an effective interest rate of 10%. The stated discount rate on this loan is: A. More than the effective interest rate. B. Less than the effective interest rate. C. Equal to the effective interest rate. D. Unrelated to the effective interest rate
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On January 1, 2020, Ann Price loaned $157773 to Joe Kiger. A zero-interest-bearing note (face amount, $210000) was exchanged solely for cash; no other rights or privileges were exchanged. The note is to be repaid on December 31, 2022. The prevailing rate of interest for a loan of this type is 10%. The present value of $210000 at 10% for three years is $157773. What amount of interest income should Ms. Price recognize in 2020? $44350. $63000. $15777. $21000.
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On January 1, 2023, Karen Hong lent $64612 to Ben Bachu. A zero-interest-bearing note (face amount, $86000) was exchanged solely for cash; no other rights or privileges were exchanged. The note is to be repaid on December 31, 2025. The market rate of interest for a loan of this type is 10%. To the nearest dollar, and using the effective interest method, how much interest revenue should Ms. Hong recognize in 2023? $19383 $6461 $25800 ○ $8600

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