Valix Finacc vol 1 Problem 6-24

Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 6-24

Requirement 1

12/31/2008       Note receivable                                                          2,500,000

                              Sales (500,000 x 3.99)                                                                  1,995,000

                              Unearned interest income                                                            505,000

12/31/2009       Cash                                                                               500,000

                              Note receivable                                                                           500,000

                        Unearned interest income                                              159,600

                              Interest income (8% x 1,995,000)                                                   159,600

Requirement 2

Note receivable (2,500,000 – 500,000)                                                                     2,000,000

Unearned interest income (505,000 – 159,600)                                           (    345,400)

Book value – 12/31/2009                                                                                         1,654,600

Requirement 3

Interest income for 2010 (8% x 1,654,600)                                                                    132,368