FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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- On January 1, 20X1, the company received a $10,000 three-year note bearing interest at 10% annually. The annual interest is received at each December 31. The market interest rate is 12% annually. November 30 is the company’s reporting date. The company used the effective interest method to account for this long-term note receivable.
Cash Received Interest Income Discount Amortized Carrying Amount
Jan 1, 20x1 9,520
Dec 31, 20x1 1,000 1,142 142 9,662
Dec 31, 20x2 1,000 1,159 159 9,821
Dec 31, 20x3 1,000 1,179 179 10,000
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